Bulgarian consumer price inflation eased to 3,9% year-on-year in May from 4,8% a month earlier, mainly due to a drop in food prices, statistics office data showed on Friday.

This is the eleventh month in a row that Bulgaria's inflation rate registers a drop on an annual basis.

On a monthly basis, consumer prices fell 0,3% from a 0,7% increase in April, the data showed.

The government's end-year target for consumer price growth has been set at 4%, while the central bank sees annual inflation at 2,5% at end-2009. The International Monetary Fund expects inflation to fall to 1,5 %.

Food prices in May fell 1,2 % on a monthly basis due to a drop in prices of vegetables and meat, while non-food prices went up by 0,3 % on the month mainly due to an increase in fuel prices. Service prices increased by 0,1%.

High inflation has been one of the key obstacles for the adoption of the European single currency in Bulgaria, which currently operates in currency board regime and the lev is pegged to the euro.

The European Union newcomer has already entered recession with its economy shrinking 5% from January to March and contracting 1.6% in the fourth quarter on a quarterly basis.

Bulgaria's gross domestic product (GDP) has contracted by 3,5% in the first quarter of 2009 on an annual basis, the first time that the country's GDP marked a drop year-on-year since the financial and economic crisis in 1997.

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