Bread prices in Bulgaria have increased by over 43% since 2021, with costs continuing to rise regardless of the VAT rate. This data comes from an analysis conducted by the Institute for Social and Trade Union Research at the Confederation of Independent Trade Unions of Bulgaria (CITUB).

Experts from the institute highlighted that nearly half of the price surge occurred after the introduction of the zero VAT rate for bread in July 2022. The exemption applied to both bread and flour, a measure that was expected to alleviate financial pressures on consumers.

CITUB’s analysis indicates that cumulative inflation since the beginning of 2021, as measured by the consumer price index, stands at 29.9%. However, the union emphasizes that this average figure does not fully reflect the actual impact of inflation on individual consumers. To understand the loss in purchasing power more accurately, it is essential to examine inflation for staple goods like bread, which are part of the small consumer basket.

The inflation rate for bread and cereals alone over this period has reached 43.3%, significantly outpacing general inflation by 13.4 percentage points. As bread is a sensitive commodity for most households, this discrepancy highlights the considerable burden on consumers.

CITUB conducted express surveys that revealed bread prices temporarily dropped by 1% to 11% following the zero VAT introduction. However, in the long term, prices have continued to climb.

While acknowledging the challenges, CITUB clarified that it has never advocated for an increase in VAT for any product. Instead, the union has proposed reducing the overall VAT rate from 20% to 15%. They argue that tax rates, originally adjusted as temporary measures during the pandemic, should return to their pre-pandemic levels, as the circumstances that prompted these changes no longer exist.

Sources:

• BNR
• CITUB