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Slovenia Business Week no. 09: Deflation in January Pushes Annual Inflation Down to 2.1%

This is the second month in a row that Slovenia registered deflation

Consumer prices dropped by 0.2% in February to push the annual inflation rate to 2.1%, down from 2.7% in January, according to data released on Wednesday, 28 February by the National Statistics Office. This is the second month in a row that Slovenia registered deflation. The 12-month average price growth remained at the January 2007 level of 2.5%.

According to Janez Sustersic, the head of the government's Institute for Macroeconomic Analysis and Development (IMAD), the absence of additional pressure accompanying the introduction of the euro was the main cause of the deflation.

Yet Sustersic believes that the consumer price index will start growing again. "We see that petrol is getting more expensive and the end of spring sales will reflect on increasing prices in March," he told STA.

According to the Statistical Office, the fall was a result of lower prices of both goods and services: goods were 0.2% cheaper on average, while prices of services were down 0.1%.

In February prices decreased in the groups communication (2.1%), food and non-alcoholic beverages (1%), transport (0.6%) and furnishing, household equipment and maintenance (0.2%).

While prices of food and non-alcoholic beverages increased in the three months before, in February a fall of 1% was registered. Food was 1.1% cheaper while prices of non-alcoholic beverages remained level.

Lower prices of food pushed inflation down by 0.2 of a percentage point and lower prices of liquid and motor fuels and of telephone services 0.1 of a percentage point each.

Higher prices were recorded in the groups recreation and culture (0.7%), health, and clothing and footwear (0.5%), restaurants and hotels (0.4%), housing, water, electricity, gas, and miscellaneous goods and services (0.3%), and education as well as alcoholic beverages and tobacco (0.1%).

As in the previous two months, prices increased in the group restaurants and hotels. Catering services were on average 0.4% more expensive, while prices of accommodation were 0.1% higher.

Higher prices of gardens, plants and flowers contributed 0.1 of a percentage point to the inflation rate while all other hikes added a combined 0.1 of a percentage point.

On an annual comparison, services were on average 4.5% more expensive, while prices of goods increased by 1%.

Source: Slovenian Press Agency STA

Author: STA, Slovenian National Press Agency