In November 2024, the National Statistical Institute (NSI) started working on the project ‘Provision of basic information for calculating purchasing power parities (PPP)’ according to the Grant Agreement with the European Commission № 101193820-2024-BG-PPP.
The aim of the project is to provide basic statistical information for the calculation of PPP. This is a multilateral activity of the European Commission (Eurostat), which is part of the Community legislation (acquis communautaire), and contributes to the improvement of price statistics and national accounts.
PPPs represent price ratios at a particular point in time in a territorial aspect. They equalize the purchasing power of different national currencies, i.e., eliminate the influence of different price levels in individual countries. They are used to compare both relative price levels and the general economic development of European countries, measured by GDP per capita in a single currency.
GDP by country in the PPP is used to determine regions eligible for financial assistance from the EU Structural Funds. The derived indicators obtained with the help of PPP are used for a wide range of analytical purposes and they are often the basis for political decisions of European institutions, international organisations (IMF and World Bank) and national governments.
The role of the NSI, in relation to the approved project, is to organise and conduct preliminary surveys, collect prices and validate the final results at the country level and overall for European countries within a 3-year cycle, as well as the surveys of investment goods (machinery, equipment and construction) and health care and the collection of other data necessary for the calculation of PPPs.
NSI will collect and provide Eurostat with input price information obtained from specially conducted specific price observations for the GDP aggregates: household consumption expenditure, government expenditure on individual and collective consumption, and gross fixed capital formation (investment goods and services). As a final result of the project, Eurostat will calculate a full set of PPP-related statistical indicators, which will be distributed to the NSI of Bulgaria for final approval before official publication.
Household consumption
NSI will conduct specific observations of market prices for consumer goods and services. The list of products is compiled in cooperation between all partner countries, the Organisation for Economic Co-operation and Development (OECD) and Eurostat. Prices are registered in various commercial establishments and companies providing goods and services to the population in the city of Sofia (markets, neighbourhood stores, supermarkets, specialised stores, department stores, service studios and others). Information is collected by registrars and also by means of questionnaires, telephone interviews or via Internet.
Consumption in the public sector
NSI will provide data on the compensation (salaries) of public sector employees, including social security, for a sample of occupations in public health services and collective services provided by the Government. These compensations are included in PPP calculations as price estimates for government services.
NSI will conduct a specific monitoring of healthcare services, which is based on mixed (quasi-) prices for hospital services, prices for pre-hospital services and medical products (medicines and sanitary goods).
Gross fixed capital formation
NSI will collect and send average national prices to the final customer for the investment goods and services. Two separate observations of capital goods prices will be conducted: one for machinery and equipment (once every 2 years) and the other for construction (annual). For machinery and equipment, prices are obtained from manufacturers, importers, distributors or buyers. Construction prices refer to a set of standard construction sites, grouped according to the type of construction - residential, non-residential and civil. Prevailing prices from the auctions are observed, i.e., auction prices that have been accepted by customers.
Auxiliary data
In addition to the prices listed above, NSI will provide core group-level time coefficient data based on the national HICP, annual average exchange rates and mid-year population, as well as the latest estimates of the expenditure weights of GDP and its end-use components for each major group.
The duration of the project activities is 16 months and will end in February 2026.
More information on methodology, metadata, statistical information and regular press releases can be found on the NSI website at the following link, as well as on the Eurostat website.
