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Political Aspects of the Latest Inflation Data.
submited on 19.03.2006 in category Political stability | Monetary policy | Macroeconomic developments
submited on 19.03.2006 in category Political stability | Monetary policy | Macroeconomic developments
According to the state National Statistical Institute (NSI) prices for the “average” consumer in Bulgaria grew by 3% in February only. This is a dramatic figure on the background of an average monthly rise in nominal incomes of less than 1% in the past eight years. Macro-data should be considered a potential source of political argumentation, which then may be a source of certain worries. Potential political problems after the “unexpectedly high inflation” may include at least the following:
Trade unions would scream out for quicker increase of wages in the budget spheres, which will bring additional pressure to increase public spending,
The Ministry of Labor and Social Policy may try to “increase” average incomes by another series of rather nonsensical, at to a great extend harmful to the business environment, measure such as increase of the minimum wage and pensions,
The average Bulgarian is getting poorer according to the statistics – such information may lead to unjustified loss of public support for the current economic policy.
Changes of the Consumer Price Index (CPI) in Bulgaria are apparently to a greater extend related to non-monetary changes (i.e. not stemming for the euro inflation). Inflation of the euro in Bulgaria (8.8% in the year till February) is significantly higher than the euro inflation in the Eurozone (2.3% for the same period). The main non-monetary factors behind the CPI change in Bulgaria are local tax policy, nominal rise of labor price, and change of the “average consumer basket”.
CPI in Bulgaria (February 2006)
Monthly change 3.0%
12-month change 8.8%
Yearly average change 5.7%
Source: NSI, Industry Watch calculations.
Trade unions would scream out for quicker increase of wages in the budget spheres, which will bring additional pressure to increase public spending,
The Ministry of Labor and Social Policy may try to “increase” average incomes by another series of rather nonsensical, at to a great extend harmful to the business environment, measure such as increase of the minimum wage and pensions,
The average Bulgarian is getting poorer according to the statistics – such information may lead to unjustified loss of public support for the current economic policy.
Changes of the Consumer Price Index (CPI) in Bulgaria are apparently to a greater extend related to non-monetary changes (i.e. not stemming for the euro inflation). Inflation of the euro in Bulgaria (8.8% in the year till February) is significantly higher than the euro inflation in the Eurozone (2.3% for the same period). The main non-monetary factors behind the CPI change in Bulgaria are local tax policy, nominal rise of labor price, and change of the “average consumer basket”.
CPI in Bulgaria (February 2006)
Monthly change 3.0%
12-month change 8.8%
Yearly average change 5.7%
Source: NSI, Industry Watch calculations.
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