Business News

Inflation at 1.8% in December (II)

Ljubljana, 30 December (STA) - Slovenia's annual inflation rate rose 0.2 percentage points to 1.8% in December, despite a 0.5% monthly drop in prices. The average inflation rate in Slovenia this year stood at 0.9%.

The biggest increase this year was seen in prices of alcohol and tobacco, which rose 8% owing to increases in excise duties at the beginning of the year.

Although rising by less than prices of alcohol and tobacco, 6.3%, home expenses contributed the most to the annual inflation rate.

The biggest increase in the group was noted in prices of water (27.2%), solid fuel (21%) and electricity (16.6%). The price of gas meanwhile fell by 17.8%.

In its reaction to the latest consumer price data, the Institute of Macroeconomic Analysis and Development (IMAD) said that a spike in prices of municipal services led to a rise in annual inflation in recent months.

Moreover, IMAD director Bostjan Vasle said that higher excise duties (on alcohol, tobacco and fuel) also contributed a large share to inflation in 2009.

Vasle warned that in adopting the exit crisis, the government would have to be careful about what excise policies it adopts in order to avoid a worsening in inflation as a result.

The IMAD director added that the recession had an important impact on consumer prices throughout the year. For most of the year, annual inflation stood at around zero, only to spike in the last three months of the year.

The biggest annual drop in prices was seen in clothing and footwear (-3.4%), communication (-1.9%) and food and non-alcoholic beverages (-1.1%).

In the latter group, prices of vegetables were down by 7.2% on average, fruit 3.4% and milk and dairy products by 2.5%.

Using the EU-compatible consumer price index, Slovenia's inflation stood at 2.1% in 2009.

Contributing to the monthly drop in prices in December were foremost prices of clothing and footwear (-2.2%), which fell due to seasonal sales, and transport (-1%).

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