Expert Warns: Risks of New Inflationary Pressure in Bulgaria Remain High

Despite the current slowdown of inflationary processes in the eurozone and the temporary stabilization of prices in Bulgaria, economists warn that the risks of new price pressure remain significant. According to macroeconomist Vasil Karaivanov, the current decrease in the consumer price index in our country is more of a seasonal effect rather than sustainable deflation.

One of the main factors that could fuel inflation over the next 12 to 18 months is the energy sector. Geopolitical tension, including the escalation of the conflict between the USA and Iran, has already pushed the price of oil above $90 per barrel, which creates long-term inflationary expectations.

However, the situation in the real sector of the Bulgarian economy remains worrying. Bulgaria holds the second position in the European Union in terms of the rate of decline in industrial production on an annual basis. This negative trend is the result of a combination of high prices for imported raw materials, energy dependence, and serious competition from subsidized Chinese manufacturers.

Parallel to the industrial decline, a serious deterioration in the trade balance is also observed – the deficit is growing by more than 86% on an annual basis compared to May. The analysis shows a structural distortion: the Bulgarian economy relies on the import of goods financed through consumer loans, while exports are focused primarily on low-processed raw materials.

On the other hand, the financial account shows a positive signal through a sharp increase in foreign investment, which has jumped fourfold since the beginning of 2026. Although this growth is mainly due to reinvested profits from companies already present in the market, the expert defines this as a sign of increased confidence, supported by Bulgaria's expected entry into the eurozone, which will provide greater predictability for businesses.