At today's press conference, the Prime Minister of the Republic of Slovenia, Janez Janša, spoke about inflation in Slovenia in the past few months, which is somewhat higher than expected. He stressed that although the annual inflation dropped from 3.8 per cent in July to 3.5 per cent in August, the government was not underestimating it. It will react accordingly and insist on the strict implementation of the policy on administered prices.
(Photo: Arsen Perić/Salomon 2000)
According to the PM, the reason for higher inflation does not lie in the system, as in this case prices would rise in all groups of goods and services which are the basis for measuring the harmonised index of consumer prices. A more detailed analysis shows that higher prices were recorded in food, and recreation and culture, particularly package holidays, which are only two groups out of twelve.
The PM stressed that the market situation and forecast rise in prices of raw materials cannot be the reason for the overall rises in prices, as with most food products they do not present an essential percentage of the cost. Therefore, retailer's forecasts that the price of bread will rise with the price of wheat are not persuasive. The European Union has been facing similar problems, which has also been stressed by the European Commission.
According to the PM, Slovenia currently has somewhat higher inflation than other Eurozone members, but it has also recorded significantly higher growth. Mr Janša mentioned Ireland, which had long-standing problems with inflation, but also above-average economic growth, which has made the country among the most developed EU members.
"Since the first of January this year, Slovenia has been in the top division. We are now competing in a considerably more demanding category. We are no longer the best among the juniors; we have qualified for the top calibre league," said the Prime Minister, adding that it would have been unrealistic to expect that we could be the best from the outset. According to PM Janez Janša, this will entail considerable efforts, for which Slovenia is well prepared and looking forward to tackling the demanding challenge.
The PM mentioned that there have recently been some instances of abuses by local authorities and undue raising of prices of municipal utility services. He announced that an even stricter decree would be passed that would transfer authority for consenting to higher regulated prices from the Ministry of the Economy to the government. He also appealed to the Competition Protection Office to act as a supervisor with regard to price-fixing by retailers, adding that the government would continue to endorse consumer protection organisations.
"However, it is perfectly clear that none of the pessimistic predictions about the tax reform entailing a VAT increase would come true. There will be no such increase," said the PM, adding that the government is investing every effort in further reducing the budget deficit, which is currently below the Maastricht criterion.
