“There are expectations of rising inflation, largely linked to the pandemic situation and the measures governments are taking to support citizens and businesses,” commented Rositsa Vartonik on the programme “Our Afternoon” on BSTV. Securing the necessary funds generally happens in two ways—by taking on new public debt and by printing money. However, she stressed that we must be aware this will have long-term effects on society’s quality of life, not least because our children will have to repay these debts.

The question of how inflation is measured sparks considerable debate among economists, while people often feel in their own budgets that inflation is higher than the officially reported figures. There are various explanations for this, one of which is the individual consumption pattern. According to Rositsa Vartonik, a good approach is to measure one’s “personal” inflation—the change over a given period in the prices of the goods and services that each of us actually uses, i.e. those included in our personal “consumer basket”. This can be done using tools available on the National Statistical Institute (NSI) website.

“The crisis triggered by COVID-19 showed how fragile the balance of our everyday lives is and how important it is to have built protective lines around our finances. Only then can we be more resilient to crises,” Rositsa Vartonik noted. She pointed out that, first and foremost, each of us should maintain an emergency fund, something financial advisers often emphasize. The crisis proved the validity of this advice, as people with such savings cope more easily with challenges. Insurance acts as our financial lifeline in times of trouble, providing protection against risks related to our property, health, and life.

It is well known that inflation erodes our savings, especially over the long term. To decide how to protect them, it is crucial first to give our savings a direction—to think about why we are saving and what our goals are. Once we answer these questions, it becomes much easier to decide how to manage our savings and where to keep them, Rositsa Vartonik explained. While for short-term goals it is important that savings are kept in a “safe” place, for long-term goals we need to look for instruments and approaches that can deliver higher returns.

Watch the full interview!