Bulgarian consumer price inflation eased to 3,7% year-on-year in June from 3,9% a month earlier, mainly due to a drop in food prices, statistics office data showed on Monday.

On a monthly basis, consumer prices fell 0,4% after falling 0,3% in May, the data showed.

In the first six months of the year, consumer prices climbed 5.1% compared to last year.

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

This is the twelfth month in a row that Bulgaria's inflation rate registers a drop on an annual basis and the second consecutive month that sees a deflation on a monthly basis.

Meanwhile, the harmonized index of consumer prices rose 2.6% year-on-year in June compared to a 3% rise in May. Month-on-month, the HICP was up 0.1%, after remaining flat in May.

The outgoing Socialist-led 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%.

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.

We need your support so Novinite.com can keep delivering news and information about Bulgaria! Thank you!