Release date 01 April 2022
Consumer prices do now always follow the same direction
March consumer prices (CPI) in Slovenia rose by 5.4% on annual level, which is an extremely high decline after the February growth (6.9%) and stems from a temporary, 3-month reduction in excise duties on electricity energy and cap on retail fuel as well as due to the high effect of the base (in March 2021, prices were already much higher than in February 2021, which means the effect of a growing base over time contributed to reduced growth as well). It is interesting to note that the March sub indicator within consumer confidence showed that this month a record share of households estimated that price growth will be even higher in the future. We can say that they were wrong, probably at least for the months of March, April and May 2022. Prices of goods increased by 6.7% on average in one year (February: 8.5%), and prices of services by 2.8% (February: 3.7%). Non-durable goods prices went up by 6.7%, durable goods prices by 8.8% and semi-durable goods prices by 4.4%. However, the average 12-month price growth strengthened (from 3.1% to 3.5% in one month), which was due to the beginning of price increases from April 2021 onwards (in the same period last year, prices fell by 0.6 %). Higher prices of petroleum products contributed the most, 1.3 percentage points (p.p.), to the overall rise in annual prices. More expensive food (by 6.9%) contributed 1 p.p. of impact. Products and services from the group housing and household equipment and current maintenance of dwellings went up by 8.5% on average (0.6 p.p. of impact). Rising prices of thermal energy (by 51.9%), new cars (by 9.9%), catering services (by 7%) and clothing (by 6.9%) each contributed 0.4 of a p.p. Electricity was on average 29.8% cheaper (temporary reduction of excise duties between March and May 2022). It eased inflation by 1 p.p.
At the end of 2021, the gross debt of the general government sector in Slovenia amounted to EUR 38,858 million or 74.7% of GDP. Compared to the end of 2020, it increased by EUR 1,435 million; relative to GDP, it fell by 5.1 percentage points of GDP. Inflation was therefore crucial in reducing the relative share of debt in GDP. The general government deficit amounted to EUR 2.7 billion or 5.2% of GDP in 2021. This was EUR 961 million lower than in the 2020. The central government sub-sector deficit was EUR 2,944 million, the other two sectors generated a small surplus (local government EUR 60 million, social security funds EUR 178 million). Source: SORS.
More economic topics are below in the attachment.
In March, price growth (HICP) in the euro area strengthened to 7.5% (February: 5.9%). Monthly growth was one of highest, at 2.5%. Higher energy prices accounted for 44% of total price growth (1.1 p.p. of the 2.5%). The differences between the countries were greater than ever and stemmed from different methodologies that contribute to shaping final energy prices for consumers on specific markets. Growth was also higher in countries where natural gas accounted for a larger share of household final consumption. In the Netherlands, prices rose by 4.7% in one month, unparalleled in the country's history. They rose by 3.9% in Spain and by 3% in Latvia. Only in Slovenia they fell by 0.4% due to a temporary reduction in network charges and caps on the price of petroleum products.
The manufacturing PMI in the euro area fell to 56.6 in March (February: 58.2), the lowest value in 14 months, that still indicates above average growth. Among the larger countries, the indicator was higher than 55 in Ireland, Austria, the Netherlands, Germany and Italy. Nowhere did it fall below 50. New orders rose moderately at the end of the quarter. Employment also strengthened in March. In Poland, the manufacturing PMI fell from 54.7 to 52.7, and March output fell for the first time in 14 months. Export orders fell, mainly to Ukraine, Russia and neighbouring countries. Challenges in logistics have increased, also due to the shortage of Ukrainian workers, who were previously more active in the Polish labour market.
China's manufacturing and services PMI fell below 50 in March for the first time in two years (manufacturing: 48.1, services: 48.4). The mood in services was weakest since August 2021. China is expected to prepare additional fiscal measures for Shanghai and the north-eastern province of Jilin due to strict containment measures. Delivery times were the longest since March 2020.
The decoupling of Russia: high-tech goods and components; Monika Grzegorczyk, J. Scott Marcus, Niclas Poitiers and Pauline Weil; Bruegel; 28 March 2022. Available at: https://www.bruegel.org/2022/03/the-decoupling-of-russia-high-tech-goods-and-components/
Comment/Abstract: Targeted sanctions on specific technologies, financial sanctions and ‘self-sanctioning’ by private companies are effectively decoupling Russia from supplies of high-tech goods. The combination of technological and financial sanctions, public pressure and reputational risk, and the collapse of the Russian economy has made the decision to leave the Russian market easy for companies, and not just those from NATO-allied countries. Russia has tried to resist technological sanctions by import substitution, but without notable success. High-tech products are developed using inputs from many countries, but few of them can function without inputs from the European Union or the United States. As a result, a single economy cannot replicate the capabilities of the global network.
Exports of goods, Slovenia, February 2022, (31 March), Statistical Office of RS; EUR 3.6 billion
Comment: We expect annual growth in exports of goods to hold up well in February, mainly due to strong rise in trade segment. In addition, higher producer prices growth bodes well for nominal figure as well.
“War is what happens when language fails.”
(Margaret Atwood)