Consumer goods prices in Slovenia fell by 0.6% in August compared to July.  This confirms that consumer goods prices have been falling for the second month in a row.  Annual inflation fell from 6.9% to 6.0% in August.  A major contributing factor to lower inflation is the drop in oil prices on world markets, with prices of food, soft drinks, apartments and health services declining as well.

 

(Photo: Tomo Brejc)

 

Other eurozone members, however, saw a less significant drop in inflation.  The annual inflation rate in the eurozone, which stood at 4% in July, fell to 3.8% in August.

 

The significant drop in inflation in Slovenia is largely due to the fact that the impact of oil prices on inflation in Slovenia is greater than in other eurozone members, as well as to the measures adopted by the Government in order to bring inflation down.  In the context of the implementation of economic policies, inflation figures first on the Government of the Republic of Slovenia’s list of priorities.  In 2007, a budget surplus was created, and with the drafting of the 2008 budget amendment, the Government forecasts that a budget surplus will be created this year as well.  With such budget policy, the Government managed to reduce public debt from 27.6% of GDP to 24.1% of GDP in 2007 (or 3.5 percentage points) in the first three years, according to a Europe-wide comparable methodology. According to the 2008 plans, the debt incurred by the general government sector will be reduced to 23.4% of GDP (or 4.2 percentage points) in the period 2004–2008. Among the eurozone members, Slovenia ranks second – outpaced only by Luxembourg – in terms of low public debt.

 

In addition to pursuing an economical and well-considered policy, the Government adopted a wide range of other anti-inflation measures. We have reduced excise duties to the lowest possible level provided for by EU regulations. We substantially support non-governmental organisations for consumer protection, with the particular intention of increasing competition on the Slovenian market. The Competition Protection Office intensively implements measures for preventing traders from concluding agreements such as those we have witnessed in the last year and a half.

 

A favourable trend towards falling inflation has contributed to a highly favourable situation on the labour market in Slovenia. Unemployment fell by 0.9% in the second quarter of this year. According to the methodology of the International Labour Organization, the unemployment rate in Slovenia stands at 4.2%, which is one of the lowest unemployment rates in the eurozone. In the second quarter of this year, the average unemployment rate in the eurozone was 7.3%, which was 3.1 percentage points more than in Slovenia.