Trade Unions survey: Bread prices have dropped between 1% and 11% - not as much as expected

The price of bread has fallen by between 1% and 11% and that of flour by between 8% and 11% compared to the end of June. This is according to the results of the second express survey of the Institute for Social and Trade Union Studies at the Confederation of Independent Trade Unions in Bulgaria (KNSB) after the introduction of a zero VAT rate for both goods in the update of Budget 2022 from early July.

According to the trade union, with the introduction of the zero rate, a more significant reduction in the price of bread was expected, or at least these were the political promises, the expert forecasts of the business and the expectations of consumers.

According to the estimates of the KNSB, the price decrease compared to June should be around 0.83 - 0.87 BGN in the most widely consumed bread varieties. At this stage, the study shows that the reduction is only 0.30 BGN.

In addition, the share of flour in the final cost of bread is usually around 50%. Therefore, the total reduction in the price of bread, taking into account both zero rates, should already be about 30%, which implies that by August the price for white bread should be 2.05 BGN for 1 kg, and Dobrudja - 1.95 BGN for 1 kg, the union said.

According to KNSB, this anti-crisis measure costs the budget about 100 million BGN, and it turned out not to be effective enough. The trade union calls for a simultaneous reduction of the entire VAT rate (for example, a reduction of the overall rate from 20% to 15%), which, they argue, will affect the prices of final produts.

The Institute for Social and Trade Union Studies survey on the price of bread covered 22 major cities. Retail prices in small and large outlets are recorded.

The study confirms the existence of uneven price reductions across the country. In particular, differences in the rate of decline in consumer prices are driven by the type of outlet, the type of bread offered and the location.

The previously observed trend of a smaller decline in the price of one of the widely consumed types of bread, namely the standard type, was maintained.

A more pronounced decrease is observed in the mass consumed varieties of bread type "White" and "Dobrudja" by about 10.6 -10.9%. For other varieties of bread, the reduction is still too little, despite the reduced tax rate on both flour and bread.

The trend of the large retail chains to report a stronger decrease in the prices of the different types of bread (especially those requiring additional raw materials for their production, including seed mix) is maintained. At the same time, in small outlets, consumer demand, arrangements with bakeries and weaker profit margins predetermined the weaker decrease, specifically in the most consumed types of bread.

Regarding flour, a more significant decrease in retail prices was recorded. Compared to June, a decrease of about 11% is reported in large retail outlets. There are also regional differences, with certain localities experiencing more noticeable price drop.