INCOMES FREEZE, PRICES UP DESPITE DEFLATION

In latest figures from the National Statistical Institute about incomes and expenses of households in 2014, Bulgarians grew neither richer, nor poorer. In practice their 2014 incomes remained unchanged at the humble - and in the words of some observers - meagre level of 2300 euro annually per household member. To draw up a broader context, let me remind you that in better-off EU countries such an income is considered modest even if paid per month. It turns out that with a not very luring European monthly salary Bulgarians have to live for as long as a whole year. How do we manage to live decently at all then?

In the first place, Bulgarians rely mostly on wages that make up for more than 50% of incomes though the annual average remains very low at 1300 euro. A quarter of household incomes come from pensions. Many have access to social benefits, child allowances and stipends but as much as 33% of all this goes to provide for mere physical survival, i.e. food. By saying food I do not mean any luxury but just staples. In the meantime, there has been a decline in consumption of meat, milk and vegetables.

Someone might be misled to think that consumer prices in Bulgaria are low, given that Bulgarians are able to survive with such scanty incomes and even save some cash in banks. Yes, consumer prices are a bit lower than across most of Europe, but not at all in a proportion reflecting the income gap. In expert estimates the cost of living in Bulgaria comprises 60% of that in West Europe. Does this mean that life in Bulgaria is 40% cheaper than in West Europe?

This “cheap stuff” is not very encouraging given that incomes of Bulgarians are not more than 1/12th of the incomes of West Europeans. The gap is staggering and even last year's deflation of 1% failed to change the gloomy context of poverty and deprivation of many Bulgarians. To make things worse, prices of some staples have gone slightly up. Still, positive trends have emerged as well and the national statistics have reported about them. Bulgarians tend to opt for healthier diets with a decreasing proportion of pastry, and spend more on clothes, healthcare, holidays and entertainment. No major changes in the picture however are likely soon for 7.2 million Bulgarians given that in 2014 the average hourly labor rate in the EU stood at 24.6 euro whereas Bulgaria saw the lowest hourly rate in the bloc at just 3.8 euro.