Two shocks for Bulgarian consumers.

Terrible weather in June and July 2005 in Bulgaria included heavy rains, hail and flooding. For the country's agricultural sector, the timing was bad. According to an August 12, 2005 report by Bloomberg News, the weather destroyed 74,100 acres of crops, and killed a great deal of livestock.

The result: A forecast of higher prices for Bulgarian consumers. The devastation, which ruined many small farmers, will likely spark a rise in the country's rate of inflation of 0.4 percent.

Normally, food prices would drop sharply in the summer in Bulgaria. But not this year. Added to the misery is the spectre of higher oil prices.

Bulgaria's consumer price index includes a market basket 38 percent of which is accounted for by food prices. In June 2005, prices fell 4.1 percent. This more than offset a rise in transportation costs of 2.7 percent. One economist interviewed by Bloomberg for its report said he thought that rising oil prices and rising food prices together would mean a 0.8 percent spike in inflation in July--and a bigger hit in August.

Oil prices are part of the 17.6 percent of Bulgaria's consumer basket that also includes housing, maintenance, water, and power. Oil prices are also calculated with transport costs and will cause increases there as well.

Part of the problem for farmers is that the floods were so serious that even crops already harvested and being stored were destroyed. One farmer complained to Bloomberg that his storage facilities were under nearly three and a half feet of water. Two of the farmer's goats drowned. The floods have placed an additional burden on an already strained government budget with high costs for a cleanup.