A 10% increase in the prices of crude oil and natural gas could raise consumer prices in Bulgaria by between 0.53% and 0.89%. In the event of a stronger, 30% price shock, the overall increase for households would reach between 1.6% and 2.7%, according to an economic analysis by Lyubomir Datsov.
The study was prepared using the “input-output” price model and draws on the National Statistical Institute’s “Supply-Use” tables for the 2018–2022 period, with 2022 as the base year.
Fuel increases amplify the direct impact on households
The analysis examines two scenarios. Under scenario A, only crude oil and natural gas become more expensive, while fuel prices are determined by the refinery’s production costs. Under scenario B, the prices of refined petroleum products from domestic production and imports also increase by 10%.
Under the second scenario, the direct effect on fuel and gas costs reaches 0.42%, compared with 0.12% under the first. The indirect increase in the prices of other goods and services adds between 0.40% and 0.47% due to higher costs for transport, food production and construction materials.
Consumer prices rise by 0.53% under scenario A and by 0.89% under scenario B. By comparison, investment prices increase by 0.28% and 0.34%, respectively, while government consumption rises by between 0.20% and 0.30%. Producer prices increase by between 0.64% and 0.81%, while export prices jump by between 1.12% and 1.48%.
Cement, chemicals and transport are hit hardest
The strongest impact is reported in the production of cement, glass and other non-metallic mineral products, as well as in the chemical industry. With a 10% increase in oil and gas prices, prices in these sectors rise by 3.1%.
Land transport becomes 2.7% more expensive, while water and air transport rise by around 1.9%. Electricity and heat increase by approximately 1.7%. In water supply and coal mining, the overall increase exceeds 1.2%, even though the direct effect of the raw material is below 0.3%.
Food products become between 0.7% and 0.8% more expensive, with the increase being driven mainly indirectly through transport, energy and production costs.
The model has limitations
The calculations cover 85 product groups. In them, crude oil and natural gas are combined in a single statistical category, so the effect would be weaker if only oil became more expensive and natural gas did not.
The model measures the initial price shock assuming that costs are passed on in full and companies’ profits remain unchanged. It does not include secondary inflationary effects such as wage increases, changes in inflation expectations or the substitution of raw materials. In the calculations, the prices of other imported goods are assumed to remain unchanged, which may slightly underestimate the actual inflationary effect.