For the first time in the last two years, the National Statistical Institute reported deflation. It is only 0.1% in May compared to April. For the last time, and only once in June, deflation was reported in June 2021.

On an annual basis, however, inflation remains in double digits and is 10.1%. Food prices continue to rise.

In May 2023, compared to the previous month, the biggest price reduction was in the following groups:

  • entertainment and culture (-3.4%);
  • transport (-2.5%);
  • housing, water, electricity, gas and other fuels (-0.4%).

The largest increase was registered in the groups:

  • alcoholic beverages and tobacco products (+1.1%);
  • clothing and footwear (+1.0%);
  • miscellaneous goods and services (+0.5%);
  • healthcare (+0.5%);
  • food products and soft drinks (+0.5%).

Among foods, the double-digit price reduction of peppers – by 18.5%, cucumbers – by 16.8%, tomatoes – by 12.7%, eggs – by 5.5%, oil – by 2.4%, fresh milk – by 2%, contributed to deflation.

However, the price of a number of goods continues to increase. Among them are carrots and beets – with an average of 11.1%, apples – with 5.9%, cabbage – with 4.7%, sausages – with 4%, minced meat – with 2.6%. Flour and rice rose in price by 1.6% on average, cheese – by 1.1%, butter – by 1.2%, and beer – by 3.5%.

In the case of non-food goods, double-digit price reductions were reported for international flights – by 17.4%, central gas supply – by 15.9%, methane – by 11.3%, propane-butane – by 11.1. Hotels offer an average of 7.7% lower prices, for laundry powders the drop is by 2.1%, and for books – by 2%. Mass gasoline A95H has a 0.8% lower price compared to April.

With smaller percentages, but continuing to increase in price in May, pellets – by 1.9%, clothing – by 1.2%, cigarettes – by 1.1%, services in restaurants – by 0.7%, bicycles and refrigerators – by 0.8%, shoes – by 0.7%, the maintenance and repair of cars – with 0.6%.

The increase in the price of raw materials, which is the basis of inflation globally, began in May 2020 after the shock collapse of the first month of the pandemic. The rising market of raw materials has a cycle for a much longer period compared to the rise so far, Tsvetoslav Tsachev, chief investment consultant at “Elana Trading”, commented for “Capital” media.

He gave an example of the period 1999 – 2008 when the Bloomberg Commodity Index was over 200%. This was due to strong demand growth in China, while the decline was a consequence of new extraction technologies (oil industry) and cheap access to capital. “I agree that central banks cannot ‘print’ commodities, but they have created the conditions for more projects in the sector with low required returns. That is, to extract more raw materials at a lower price. And now that inflation is making them unprofitable, their prices are going up”, he adds.