Prices of basic foods have increased: Sugar, oil, and flour see the highest price hike

The prices of food products, fruits, and vegetables have risen over the past month, a trend that consumers have long noticed. The data was confirmed today, January 6, by the State Commission for Commodity Exchanges and Markets. Does this mean that food inflation will continue to accelerate?

Prices of basic food items rose in the first week of the year, according to the Commodity Exchanges Commission. The price of sugar has increased by nearly 7%, while oil, flour, and rice have seen an average rise of 4%.

Bread prices hike, with increases exceeding 30% in some areas

Several factors are driving the price hike, including seasonality.

"Every year, during the first two weeks of January, we typically see a similar increase in wholesale prices. This is supply-driven inflation, caused by market imperfections. This rise in wholesale prices, which consumers will soon feel, is another argument for why the 2025 budget needs to be adopted quickly and why people's incomes need to be increased," said Lyuboslav Kostov, chief economist at the Confederation of Independent Trade Unions in Bulgaria (CITUB).

The higher price of flour as an intermediate product for bread production may also affect its cost, but the pricing throughout the supply chain and the justification for markups need to be scrutinized.

"They say that the return of the 20% VAT on bread and restaurant services will affect the final price. From our perspective, this is completely non-market-driven. Especially since when the VAT was reduced, prices did not decrease. If prices didn't fall then, on what grounds are you claiming they will rise now? I don’t understand—it seems to be a flawed market," added Lyuboslav Kostov, Chief Economist of CITUB.

Among animal-based products, the biggest price increases are seen in eggs and chicken legs—by nearly 3%. The price of fresh milk has risen by over 2%, while cheese, butter, and yogurt have increased by nearly 1%.

For fruits and vegetables, the largest jump is in the price of greenhouse cucumbers—up by over 8%, and carrots, which have risen by more than 6%. Onions, however, have seen the biggest price drop among all food products, falling by 10%.

Experts believe that higher electricity and gas prices will contribute to food inflation but not significantly.

"It won’t have a major impact on the consumer price index, and inflation will remain at current levels," Kostov added.

The causes of inflation remain external economic factors, supply shocks, and disruptions in supply chains.

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