site.btaBulgarians Not Getting Poorer Generally as Their Purchasing Power Grows by 80% in 10 Years, Think-Tank Says

Available data on incomes, consumption and poverty in Bulgaria show a rising level of well-being in recent years rather than growing poverty. The real income and purchasing power of households have increased, while expenditure patterns have shifted from basic necessities to higher spending on leisure, culture and education. At the same time, the existence of poverty and inequality cannot be denied, but they are increasingly concentrated in individual vulnerable groups. This suggests that social policy should be calibrated to the highest-risk communities, says Adrian Nikolov, senior economist at the Institute for Market Economics (IME), in an analysis published on the IME website on April 24.

According to Nikolov, Bulgaria's real-income index – the average consumer income adjusted for inflation to reflect purchasing power (the last of which has gone up by more than 80% in 10 years) – has grown steadily over the last decade. Three periods are clearly discernible during that time: relatively slow linear growth until 2021, a sharper slowdown due to double-digit inflation in 2022, and accelerated growth between 2024 and 2025, with real income increasing by 13% in 2024 compared with the previous year and by 12% in 2025. These data support the conclusion that "impoverishment" is not the word to describe the change in the overall picture, nor should it be the target of indiscriminate remedial action. Despite high inflation over the last five years, households can now afford almost double the amount of goods and services they could buy 10 years ago.

Real income growth has concurred with a gradual shift in household expenditure patterns, the analysis says. In 2025, food accounted for 29.3% of total household spending, down by 1.5 percentage points compared with 2016. In other words, Bulgarians have come to spend less on food despite high inflation of food prices. Amid zooming real estate prices and housing rents, the share of expenditure for the home (including utility costs) has fallen from 14.3% to 10.7%. What has been on the rise is leisure, culture and education spending as a share of household budgets. A significant increase has also been reported in the share of taxes and social security contributions, which have reached 15.4% of total household expenditures, reflecting a rise in salaries and a record-low unemployment rate.

Optimism is tempered by poverty figures for 2025. The percentage of people under the poverty line has remained over 21%. It should be noted, however, that against the backdrop of Bulgaria's declining population, the number of people under the poverty line showed an absolute decrease to 1.369 million in 2025 from 1.55 million in 2022. Importantly, the poverty line (EUR 442 monthly in 2025) has been rising at a higher rate than annual inflation, meaning that the purchasing power of households living around the poverty line has been growing. Also on a positive note, inequality indicators are gradually improving, although the income inequality situation in Bulgaria remains one of the worst in the EU, the analysis goes.

The main poverty factors remain unchanged, the author notes. Among the Roma community, the share of poor people is almost two-thirds, but among ethnic Bulgarians, it is 15%, markedly lower than the national average. Among people with elementary or no education, those under the poverty line are close to 50%, and in the group of the unemployed, the poor account for 55%. These three factors – integration into the labour market, education background, and low social inclusion of the Roma – largely determine the dynamics and distribution of poverty in this country, and along with a faster income growth in higher-income groups compared with other groups, they foster inequality.

The current landscape of incomes, purchasing power and poverty clearly shows how social policy can be improved in the immediate future, the IME analyst says. He sees no valid arguments in favour of supporting consumption or intervening in pricing practices, especially if such measures are implemented across the board – in fact, they would add upward pressure on inflation. It is necessary to reform the social assistance model to ensure that welfare spending is targeted more effectively based on the specific needs of individual communities. This should be high on the agenda of the next social policy minister. The following steps are recommended:

• Adopting a single approach to all primary social assistance instruments, which implies that monthly benefits, heating allowances and some family support payments should be calculated on the basis of a common criterion: household income;
• Channelling support to meet needs on two distinct levels: first, universal support against poverty and deprivation; and second, support for people with specific needs, including personal assistance, independent-living support and health-related aids; and
• Consolidating social services, personal assistance and welfare payments into a single package. The starting point should be an assessment of the needs of the concrete individual and the household. Based on that, the beneficiary should be offered a package of social services, personal assistance and welfare payments. At the local level, this would mean a single point of contact and more services in the home and in the community.