Bulgaria’s 2003 inflation way off target

SOFIA (Reuters) – Bulgaria’s end-2003 inflation quickened to 5.6 percent, exceeding the government’s target of 3.9 percent, data showed yesterday, but officials and analysts said the higher consumer prices were not alarming. December inflation reached 1.8 percent from a month earlier due to a rise in food prices, which lifted last year’s cumulative inflation above the 3.8 percent registered at end-2002, the statistics office (NSI) said. Bad weather damaged a large part of Bulgaria’s 2003 grain crops, causing shortages and boosting prices of related products, which was the main factor behind the higher end-2003 inflation, analysts said. But Finance Minister Milen Velchev said the rise in inflation was not big enough to cause any worries, although it might force the government to revise its 2004 target up. «The deviation (from the target) is normal and will not lead to any macroeconomic instability,» Velchev told reporters. «The higher 2003 level could raise the 2004 inflation target. But the increase would be much smaller than one percentage point,» he added. The government of ex-king Prime Minister Simeon Saxe-Coburg, which took over in July 2001, has forecast end-2004 inflation of 4.2 percent. Analysts said the 2004 target was achievable if crop production recovered.

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