On June 4, Bulgaria will find out whether the euro will officially replace the lev in January 2026. Ahead of that, Nova TV launched an informational segment titled “The Euro – Questions and Answers,” where viewers can send their concerns and questions via email. Reporter Nelly Todorova investigated the most pressing topic—how the euro affects inflation.

According to the European Commission, the introduction of the euro in countries that adopted it most recently had only a minor direct impact on inflation. The price effect in the initial months following the currency switch in Croatia, Lithuania, and Latvia ranged from 0.04% to 0.21%.

Croatia, which joined the eurozone in 2023, recorded an average annual inflation of 8.4% that year. In comparison, inflation reached nearly 11% in 2022, when the war in Ukraine triggered energy and food price shocks across Europe. The EC estimates that the effect of the currency switch on Croatia’s prices in January 2023 was less than 0.25%.

Still, that period saw a noticeable increase in prices for some staple goods, prompting a consumer backlash and even shop boycotts. In response, the Croatian government intervened, sanctioning retailers for unjustified price hikes. In some cases, the fines exceeded €20,000.

The main takeaway is that the euro alone is not responsible for inflation spikes. Price increases were largely driven by opportunistic practices among traders and the absence of proactive state oversight. The Croatian experience suggests that stronger regulatory mechanisms could have prevented such abuses.

In Lithuania, which adopted the euro in 2015, inflation was actually negative that year—annual deflation reached -0.7%. In January 2015, consumer prices had fallen by 1.27% year-on-year. Without the euro effect, the decline would have been about -1.35%. Inflation was modest in the surrounding years as well—below 0.5% in 2014 and just under 1% in 2016.

Despite this, in May 2016, Lithuania saw the so-called “cauliflower revolution”—a grassroots protest sparked by a viral image of a cauliflower priced at €3.49. The incident reflected widespread frustration over rising prices and stagnant wages. Although this happened nearly 18 months after euro adoption, it is still debated whether the currency change played a role. Authorities acknowledged that prices were outpacing income growth but attributed the trend to the country’s heavy reliance on imports. Public anger was primarily directed at a handful of major retail chains controlling 80% of the market. As a corrective, the government began closer monitoring of pricing practices and introduced penalties for unjustified markups.

Latvia joined the eurozone a year before Lithuania. When the euro was introduced there, annual inflation was under 1%, compared to 0% a year earlier. In 2015, prices rose by only 0.2%. Despite initial concerns, inflationary fears in Latvia ultimately proved unfounded.

Latvia’s smooth transition is partly credited to proactive steps taken ahead of time. One year prior to the currency switch, authorities began tracking the prices of 120 frequently purchased goods and services in the country’s seven largest cities. This included not just food, but also services like hairdressing, dining, and auto repairs. This approach could serve as a useful model for Bulgaria, helping to deter speculative price hikes in the lead-up to the euro, especially in the final months of 2025.

Interestingly, data from the past year reveals that inflation was often higher in countries outside the eurozone. Romania had the highest inflation at nearly 6%, while eurozone members Lithuania and Latvia recorded some of the lowest rates. Bulgaria saw a 2.6% rise in its harmonized index of consumer prices.

Source: Nova TV