INFLATION AND CONSUMER PRICE INDICES IN DECEMBER 2010

The consumer price index (CPI) in December 2010 compared to November 2010 was 100.4%, i.e. the monthly inflation was 0.4%. The annual inflation in December 2010 compared to December 2009 was 4.5% (Table 1). The annual average inflation, measured by CPI, in the last 12 months (January 2010 - December 2010) compared to the previous 12 months (January 2009 - December 2009) was 2.4%. Figure 1. Inflation measured by CPI by months
% 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5
XII.2009 I II III IV V V VI VII X X XI XII.2010

orresponding month of the previous year=100 Previous month=100

In December 2010 compared to the previous month the prices of goods and services in the main consumer groups have been changed as follows: Food and non-alcoholic beverages - an increase of 0.4%; Alcoholic beverages and tobacco - an increase of 0.1%; Clothing and footwear - an increase of 0.1%; Housing (rentals, maintenance and repair), water, electricity, gas and other fuels - an increase of 0.2%; Furnishings, household equipment and routine maintenance of the house - a decrease of 0.2%; Health - an increase of 0.3%; Transport - an increase of 1.8%; Communications - a decrease of 0.2%; Recreation and culture - an increase of 2.1%; Education - the prices have remained at the level of the previous month; 1

Restaurants and hotels - an increase of 0.6%; Miscellaneous goods and service - an increase of 0.2%.

The harmonized index of consumer prices (HICP) in December 2010 compared to November 2010 was 100.8%, i.e. the monthly inflation was 0.8%. The annual inflation in December 2010 compared to December 2009 was 4.4% (Table 2). The annual average inflation, measured by HICP, in the last 12 months (January 2010 - December 2010) compared to the previous 12 months (January 2009 - December 2009) was 3.0%. In terms of HICP in December 2010 compared to the previous month the prices of goods and services in the main consumer groups have been changed as follows: Food and non-alcoholic beverages - an increase of 0.4%; Alcoholic beverages and tobacco - the prices have remained at the level of the previous month; Clothing and footwear - an increase of 0.1%; Housing (rentals, maintenance and repair), water, electricity, gas and other fuels - an increase of 0.1%; Furnishings, household equipment and routine maintenance of the house - a decrease of 0.2%; Health - an increase of 0.3%; Transport - an increase of 2.0%; Communications - a decrease of 0.2%; Recreation and culture - an increase of 1.4%; Education - the prices have remained at the level of the previous month; Restaurants and hotels - an increase of 1.4%; Miscellaneous goods and service - an increase of 0.4%.

The price index of a small basket (PISB) in December 2010 compared to November 2010 was 100.5% and the overall increase since the beginning of the year (December 2010 compared to December 2009) was 104.2% (Table 3). In December compared to the previous month the prices of goods and services in the small basket for the 20% households with the lowest income, have changed as follows: Food products - an increase of 0.8%; Non-food products - an increase of 0.3%; Services - the prices have remained at the level of the previous month.

Methodological notes The consumer price index (CPI) is the official measure of inflation in the Republic of Bulgaria. It measures the total relative price change of goods and services used by households for private (nonproduction) consumption and it is calculated by applying the structure of the final monetary consumption expenditures of the Bulgarian households. The main source of information for the expenditures is the household budget survey in the country. CPI in year t is calculated with the expenditures structure of year t-1. The Harmonized Index of Consumer Prices (HICP) is the comparable measure of inflation across EU Member states. It is one of the criterions of price stability and for readiness of Bulgaria to join the euro-zone. HICP, as well as CPI, measures the total relative price change of goods and services. Both indices are calculated using the same basket of goods and services, but differ with respect to the used weights. HICP is calculated through the use of weights, which reflect the individual and the collective consumption of all households (incl. institutional and foreign households) on the economic territory of the country. The main source of information for HICP weights is the national accounts data. HICP in year t is calculated with the weights of year t-3. The Price Index of a Small Basket (PISB) is a measurement of the relative average price changes of 100 socially useful and vital for the living goods and services. The weights of this index reflect the expenditures of the 20% lowest income households. The source of weights information is the Households Budget Survey in the country. This index in year t is calculated with the weights of year t-1. ------------------------------The chain consumer price indices measure the price change in current month compared to the previous month. The chain consumer price indices are used a measure of monthly inflation. The 12-month consumer price indices measure the price changes having occurred between the current month and the same month of the previous year. The 12-month consumer price indices are used a measure of annual inflation. Consumer price indices over December of the previous year measure the accumulated changes in prices of the current month with respect to December of previous year. Consumer price indices over December of the previous year are used as measures of the inflation since the beginning of the year. In December of each year, the 12-month index is equal to the index over December of the previous year. The annual average consumer price indices measure the average price change during the 12 months of the current year compared to the average price change during the 12 months of the previous year. The annual average consumer price indices are used as a measure of the annual average inflation.

Annexes Table1
CONSUMER PRICE INDICES: DECEMBER 2010
(Per cent)

Commodity groups

2009 weights % 100.000 35.374 5.557 3.714 17.405 4.432 6.452 7.324 5.417 4.052 0.587 5.872 3.813 36.793 31.093 5.497 26.617

Previous month = 100

December 2010 December Corresponding 2009 = 100 month of the previous year = 100 104.5 104.0 126.4 100.1 103.8 99.4 101.0 110.1 98.8 99.1 101.6 101.5 104.0 104.0 107.5 102.2 102.2 104.5 104.0 126.4 100.1 103.8 99.4 101.0 110.1 98.8 99.1 101.6 101.5 104.0 104.0 107.5 102.2 102.2

00 Total CPI 01 Food and non-alcoholic beverages 02 Alcoholic beverages, tobacco 03 Clothing and footwear 04 Housing, water, electricity, gas and other fuels 05 Furnishing, household equipment and routine maintenance of the house 06 Health 07 Transport 08 Communications 09 Recreation and culture 10 Education 11 Restaurants and hotels 12 Miscellaneous goods and services Foods Non-foods Catering Services

100.4 100.4 100.1 100.1 100.2 99.8 100.3 101.8 99.8 102.1 100.0 100.6 100.2 100.4 100.6 100.1 100.5

Table 2
HARMONISED INDICES OF CONSUMER PRICES: DECEMBER 2010
(Per cent)

December 2010 Commodity groups 2007 weights 1000.000 201.215 54.579 37.378 91.637 52.277 51.124 199.470 53.996 59.016 11.221 146.343 41.744 2005 = 100 Previous month = 100 December 2009 = 100 Corresponding month of the previous year = 100 104.4 103.9 125.5 100.4 104.3 99.9 100.9 107.3 98.9 98.9 101.8 100.6 109.1

00 Total HICP 01 Food and non-alcoholic beverages 02 Alcoholic beverages, tobacco 03 Clothing and footwear 04 Housing, water, electricity, gas and other fuels 05 Furnishing, household equipment and routine maintenance of the house 06 Health 07 Transport 08 Communications 09 Recreation and culture 10 Education 11 Restaurants and hotels 12 Miscellaneous goods and services

139.30 141.55 263.21 128.67 134.47 115.90 127.44 135.75 93.45 115.84 160.73 155.81 160.66

100.8 100.4 100.0 100.1 100.1 99.8 100.3 102.0 99.8 101.4 100.0 101.4 100.4

104.4 103.9 125.5 100.4 104.3 99.9 100.9 107.3 98.9 98.9 101.8 100.6 109.1

Table 3
PRICE INDICES OF 100 SOCIALLY USEFUL AND VITAL FOR THE LIVING GOODS AND SERVICES IN THE SMALL BASKET FOR THE 20% LOWEST INCOME HOUSEHOLDS: DECEMBER 2010
(Per cent)

Commodity groups Total PISB Food and non-alcoholic beverages Clothing and footwear Housing, water, electricity, gas and other fuels Furnishing, household equipment and routine maintenance of the house Health Transport Communications Recreation and culture Miscellaneous goods and services Foods Non-foods Services

2009 weights - % 100.000 58.789 2.927 21.626 2.349 6.578 1.498 2.216 0.662 3.355 58.789 20.361 20.851

December 2010 Previous month = 100 100.5 100.8 100.1 100.2 100.2 100.0 100.1 100.0 100.0 100.3 100.8 100.3 100.0