Today’s inflation data from Bulgaria were not as bad as the market had feared. Even so, prices are still rising at their fastest pace for two years and, in the context of the currency board arrangement with the euro, will mark a further decline in the country’s export competitiveness position. However, with global commodity prices set to moderate and lower euro-zone growth dampening demand for Bulgarian output, disinflationary forces should return to the fore by the end of the year.
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