“With positive inflation, as in our case it is 3%, food prices continue to rise. The norm for inflation is 2% and we have not yet reached it. A drop in inflation means a gradual stoppage of price growth, not a reduction. Prices of food will remain high, a very severe crisis must be experienced in order for there to be a decline. This would be unemployment and a decline in the gross domestic product – things that no society wants to go through,” noted Panchev.
According to him, if deflation occurs because of new technologies that make goods and services cheaper, if international trade opens up with a major producer like China, as has happened in the past, prices are pushed down. “However, if inflation comes from the contraction of the economy and bankruptcies, this is a negative phenomenon. We saw severe deflation in the first 6 months after Covid. Queues formed at the labor offices in Sofia,” recalled Stoyan Panchev.
“It is possible that lamb in Italy and Spain is currently cheaper than in Bulgaria, we were also in the top 3 in Europe in terms of the price of eggs. In our country, we traditionally maintain high prices for fats, this is not strange,” the economist specified and explain why this is so. “Our incomes are lower, but there are two reasons for this, to keep food prices high. First, we are participants in the common market – our producers and traders are also part of it. The most marketable goods for export start with their prices to catch up with the prices of the other parts of the open market. It is about convergence or convergence of prices to the higher number,” explained the expert.
“Another reason is that in most countries there are different programs to subsidize local production. In this situation, there is a greater supply in these particular markets and that pushes prices down. French cheese, Irish butter are examples of this type of subsidized products. In In Bulgaria, this practice is not widespread, but is concentrated among wheat producers with large production,” noted Stoyan Panchev.
“Holidays raise prices, as usual. High demand leads to high prices. Turkey is a good example of buying products more profitably, because it is a country outside the EU and there are no certain regulations there, which helps producers to keep the price lower. The Turkish lira depreciates faster than the euro, which means that we can find competitive prices there. However, travel also affects the overall price of the market from other countries,” the economist recalled.
“People have been offering lamb for years through the informal economy, for example online, which allows them to provide their produce at lower prices. This is not new. If you buy lamb from a store, there are costs involved in maintaining the store, advertising, staffing and that affects its price. There are no such costs when we shop directly from the manufacturer and the quality of this production sometimes exceeds that of mass production,” concluded economist Stoyan Panchev.
