We are experiencing an unprecedented oil shock and high fuel prices, which are making a serious contribution to inflation in Bulgaria. And yet, domestic factors for inflation prevail - service prices have a higher contribution to inflation than fuel and energy prices. In terms of growth rate, services are rising three times faster than food prices and 25 times faster than industrial goods.
Central banks and analysts monitor inflation in services as an indicator of domestic and core inflation. The reason is that inflation in services is mainly influenced by domestic economic conditions, and not so much by external shocks such as fuels, for example. Therefore, services inflation is also a good indicator of domestic macroeconomic policy.
In short, for the time being, the domestic environment is pro-inflationary, more so than the oil crisis. The high budget deficit and the boom in consumer and household credit remain a problem.