Business News

IMAD to Upgrade Inflation Forecast for 2011

Ljubljana, 24 January (STA) - Director of the Institute of Macroeconomic Analysis and Development (IMAD) Bostjan Vasle has announced that the government think-tank would probably upgrade the inflation figure for 2011 in its spring economic trends forecast because of unexpected price hikes on global markets.

IMAD projected last September 2.2% inflation for this year, but then upgraded the figure to 2.3% only a month after.

However, the prices of food on global markets have increased recently, which Vasle said is a consequence of economic recovery and natural disasters in the recent months, primarily floods. The prices of oil, zinc, copper and cotton have also increased, he said in an interview for Monday's daily Delo.

Rising food prices have a great impact on inflation. If the prices of food went up by 5%, which is not a major increase, the inflation forecast for this year would go up by almost 50%, from slightly over 2% to almost 3%, Vasle said.

He believes that retailers would find it easier to lift food prices if wages in Slovenia continue to grow and if this year's economic growth is in line with IMAD's forecast of 2.5%.

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