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Slovenia Business Week no. 10: Tolar-Euro Price Tags Mandatory

In this way consumers should get used to prices in euros in anticipation of the adoption of the single European currency on 1 January 2007

As of Wednesday, 1 March, prices of goods and services are designated in tolars as well as euros in line with an act on informative double pricing. In this way consumers should get used to prices in euros in anticipation of the adoption of the single European currency on 1 January 2007.

The informative double price tags, which are also designed to help prevent unjustified price hikes and consequently inflation, will be mandatory for 16 months, until the end of June 2007.

According to the new act, the conversion rate must be calculated to three decimals, whereby prices converted from tolars to euros will be rounded up to the nearest cent.

The act also determines several groups of exemptions, including petrol sales, catalogues, bread, meat and delicatessen, vending machines, goods at farmers' markets, border shops, motorway toll, air, rail and bus transport, and taxis.

In line with the new legislation, invoices will not state all prices in euros, merely the total. Grocers will not be obliged to list prices in euros of price per unit (a kilo, a litre, and so on), but merely the price in euro per item.

Petrol stations will have to list prices in both currencies per litre and the exchange rate on or near the petrol pump. Double prices will not be required for train or bus tickets issued on the train or bus. The same goes for taxis.

Until Slovenia concludes its two-year membership in the ERM II in June 2006, the central exchange rate is set at SIT 239.64 to one euro. After the date, a final exchange rate will be set.

Retailers had been opposed to the introduction of double pricing so early, arguing that they would incur additional costs if the exchange rate is different than the central parity rate when it is fixed upon the completion of ERM II.

They finally gave in, but expressed their hope recently that the final rate would not differ from the central parity rate.

If the rates do differ, the cost for retailers would increase by SIT 1.3bn (EUR 5.42m), adding to the SIT 5.9bn (EUR 24.6m) the costs of the changeover will amount to, according to the Institute for Macroeconomic Analysis and Development (IMAD).

The retailers are well prepared for double pricing, the Trade Association at the Chamber of Commerce and Industry of Slovenia (CCIS) has said. No serious problems are expected, even though they will have to shoulder the bulk of the costs.

The association has held several meetings in the last three months, informing traders on the act. It has also been publishing a weekly booklet with information on the dual pricing period, Marjanca Simsic told STA. "We are still receiving numerous calls, especially from small shops, however, there are no more unanswered questions," she added.

At every meeting, a system of price monitoring or "pricewatch" was presented. It will be carried out by the International Institute for Consumer Research and the Slovenian Consumers' Association upon the request of the government's Consumer Protection Office.

Economics Minister Andrej Vizjak is not worried about possible price rises; he believes that "traders will be forced by the competition to lower prices", he told the press after the cabinet's session.

The economics and finance ministries have according to Vizjak taken numerous measures in order to prevent hidden price increases. "However, we cannot and do not wish to prevent price rises which are formed freely on the market," Vizjak stressed.

Source: Slovene Press Agency STA

Author: STA