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Annual Inflation at 1.3% as Prices Fall in June (adds)

Ljubljana, 30 June (STA) - Cheaper fruit, clothing and energy resulted in an average drop in prices by 0.5% in June, while inflation at the annual level stood at 1.3%, down 0.9 percentage points from the month before, data released Thursday show.

Contributing the most to monthly deflation were the prices of fruit (0.3 percentage points), which fell by 16.2%.

Also down were prices of fuel and energy - hard fuels were 5.1% cheaper, electricity 3.2% and liquid fuels 1.7% - and the prices of clothing and footwear (down 2.9%), which contributed 0.2 percentage points to deflation.

"The season of deflation...has arrived a month early. This year, prices fell significantly already in June, while last year this happened in July. We expect similar trends in the coming month as well," Statistics Office director Irena Krizman told the press.

The Institute of Macroeconomic Analysis and Development (IMAD), a government think-tank, also said that deflation was not typical of June. In the last ten years, consumer prices decreased in June only in 2002 and 2006, it noted.

A drop in the prices of fresh fruit is "typical and expected for this month, but usually it is much shallower than this year," IMAD director Bostjan Vasle said.

However, he highlighted the substantial rise in the prices of fruit from the past months. In the first five months of the year, price hikes exceeded those in the eurozone five-fold, he said.

Cheaper fuel and energy in the past month has played an important part in the drop in annual inflation, as price rises in energy-heavy categories receded compared to previous months.

Prices of transport were up only 0.4% on last June while prices in the housing and home equipment group were up 3.9%.

The highest year-on-year price increases have been seen in the group of alcoholic beverages and tobacco (6.2%) and food and non-alcoholic beverages (4.6%).

Prices in hospitality were down 10.5% on the year, while clothing and footwear was 3% cheaper than in June 2010.

In the first six months of 2011, consumer prices were up by 1.9%, compared to 2.4% in the same period last year.

Measured with the harmonised index of consumer prices, the EU standard, prices were down by 0.6% at the monthly level and up by 1.6% year-on-year, the Statistics Office said.

This is well below the average inflation in the euro area, which stood at 2.7% in June, the same as in May, Eurostat reported.

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