site.btaHigher Bread Prices Reduce Consumption

Bread consumption in the country is returning to normal after having shrunk a little, Mariana Kukusheva, Chair of the Board of the National Branch Union of Bakers and Confectioners, told Bulgarian News Agency (BTA) here on Saturday.

Four types of bread were exempt from VAT and are no longer exempt since January 1. A check by BTA correspondents in the country showed that increases mostly match the amount of the 20% tax, but in some placesthey exceed it. The industry commented that the price is generally influenced by higher costs - the rise in electricity and water, the increase in the minimum wage. 

"After an initial reduction in the amount of bread bought because of the shock of the new prices, people are returning to their previous consumption. You cannot live without bread," Kukusheva said. There is no more interest in the more luxurious breads as not everyone can afford them, she added.

"The Food and Agriculture Organization (FAO) has announced at least 50% higher food prices for 2025. We will not be outside that statistic," Kukusheva said.

A check by BTA's Balkans Service showed that bread in all of Bulgaria's neighbouring countries has a lower VAT than the country's standard VAT. The VAT on bread is highest in Greece - 13%, and lowest in Turkiye - 1%. 

"Many times I have given examples of countries in the European Union and those outside the EU. Everywhere bread is exempt or has minimal VAT, not to mention Serbia and Turkiye, where it is subsidised additionally", Kukusheva commented.

According to her, the effect of introducing a zero rate for the most mass types of bread is a brightening of the industry. According to the industry union, when the measure was introduced to help people and businesses because of the pandemic, the grey economy was around 45%. The expectation is that with the higher costs, a grey sector will form again. 

"The bad thing is that the consumer ends up paying it all. This change is in fulfilment of the wish of the Confederation of Independent Trade Unions of Bulgaria (CITUB). The social partners explained that bread prices have not gone down, they may not have gone down, but they have not gone up. You can do the math on how many times food prices have gone up." According to Kukusheva, the social partners liquidated the only social measure in the food sector.

Kukusheva predicted that by the middle of this year it will be seen how the increased economic burden will affect the companies in the industry: "Maybe by the middle of the year I expect the companies involved in the production of bread, bakery and confectionery products to decrease."

She pointed out that this process depends on the company's resources, its financial stability, the market niche in which it operates, the richness of its assortment, and its team.

"Let's wait," Kukusheva said in response to a question whether the industry would seek support from the new government and in the new budget for such a measure.