The boycott is pressure on politicians to make some decisions, pressure is on traders. The effect is social rather than real, but as a result of it there may be changes. This was stated by municipal councilor Vanya Grigorova in the program “Face to Face” on bTV, quoted by novini.bg.
Inflation is more of a political phenomenon than an economic one. It is not something that happens magically, it is the result of political decisions and more precisely of the state's budget policy. It depends on four main factors – from the size of the budget deficit, financed by debts, from the increase in the costs of producers and traders, from the level of competition throughout the supply chain and from cartel agreements, said economist Nikola Yankov on the topic of high food prices and the role of regulators.
In Bulgaria, in recent years, we have witnessed a policy that has led to this current inflation. Budgetary expenditures have increased, that is, money has been pumped into the economy with almost the same production of goods and services. This is a natural economic process. The second thing that happened was that incomes increased, the social security burden increased, which increased the costs of producers and traders, which also affects prices. Competition in Bulgaria has begun to be limited, because many investors have started to leave the country, we have an extremely slow growth of investments in every sector. Cartel agreements are another problem, but here the CPC must play its role. The boycott will have no effect, he explained.
This is not a small thing. People have this mechanism to boycott. They do not have regulators in their hands, nor can they monitor whether experts from one company meet with experts from another through spies. There are other mechanisms, such as setting a ceiling for goods, a ceiling for markups, and so on - this is not an unknown practice in the EU, Grigorova added.
The price ceiling will be a step in the opposite direction of what we need to do. It will drive investors out of the market and will lead to even greater restrictions on competition. We are blaming private individuals for something that is a product of our budget policy. I do not think that inflation in Bulgaria is due to cartel agreements. There are over 100,000 retail outlets in Bulgaria, the vast majority of which offer food products. How do you make a cartel between them? This is frivolous, Yankov emphasized.
These are rumors that are not based on facts. The claim that the budget provoked inflation is ridiculous. The huge increase in inflation came in 2022, when the war in Ukraine began, when we terminated the contract with “Gazprom”, when the prices of energy resources began to increase, emphasized Grigorova, adding that this has nothing to do with the increase in pensions and salaries. “The increase in GDP was stimulated by greater consumption. We are talking about speculation here. We have a big problem because of the right-wing ideology that has been applied for so long. There is no definition of speculation in the law. How can we prosecute it? That is precisely why it is done through mechanisms such as price ceilings. I am a supporter of another option, in which all chains are obliged to offer a package of social goods at a certain price, but they must meet certain requirements”, she suggested.
That's how it's done in Venezuela and Cuba. There is a boycott, but prices are not controlled anywhere and it's not done that way. If you want, the state can buy up all the retail chains and go back to 1985”, the economist replied.
”In a normal economy, the way to have lower prices is called competition”, he emphasized.