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Bulgarian Inflation Quickened In March On Fuel, Food

Bulgaria's inflation rate rose to the highest in more than 10 years last month as higher fuel costs pushed up prices for food and services.

The rate rose to 14.2 percent from a 10-year high of 13.2 percent in February, the National Statistics Institute said in a statement today. Consumer prices gained a monthly 0.8 percent after a 1.1 percent increase in February. The median estimate of six economists surveyed by Bloomberg was for an annual 13.5 percent.

Bulgaria and the Baltic states of Latvia, Lithuania and Estonia are struggling to slow inflation because their currency board systems limit options for central banks to use interest-rate policy to stem price growth. The nations need to hold down inflation so they can adopt the euro.

``Apart from fuel and food prices, spending on tobacco also rose as higher excise duties imposed in January affected cigarette prices,'' Georgi Angelov, a senior economist at the Open Society Institute in Sofia, said today. ``A 33 percent increase in the excise duty on tobacco goods was not felt in the first two months of the year as shopkeepers stocked up on cigarettes at last year's lower prices. Obviously supplies ran out in March.''

Prices on alcohol and tobacco rose 2.3 percent in March after 0.3 percent in February.

Food, Transportation

Food prices, which account for 35 percent of the consumer- price basket, rose 1 percent in March, after a 1.7 percent increase in February. Transportation costs, which include gasoline prices and make up 8.6 percent of the consumer-price basket, rose 1.2 percent in March, compared with a gain of 0.9 percent in February.

``Rising costs of global oil and food prices push up service costs,'' Tsvetoslav Tsachev, head of research at Elana Trading in Sofia, said in an e-mail before the release. Service costs rose 2.2 percent in March.

Bulgaria's harmonized inflation rate, measured under EU- methodology, rose to 13.2 percent in March from 12.1 percent in February. Prices climbed 0.9 percent in the month, compared with 1 percent in February, the statistics office said.

The European Commission warned Bulgaria in a Feb. 13 report that it is ``vital'' the government act quickly to contain external imbalances and inflation to minimize economic risks. The International Monetary Fund cut Bulgaria's EU harmonized inflation forecast on April 8 to 7.2 percent from a previous projection of 7.9 percent.

The Center for Economic Development, a Sofia-based research group, predicted on Feb. 11 an inflation rate of 6 percent at the end of 2008.