Release date 3 May 2022
April’s CPI growth in Slovenia well above our expectations
April’s consumer prices (CPI) increased by 2.6% in one month, which was much higher than we expected (+0.9%). Higher prices of food (by 2.9%) and holiday packages (by 19.2%) contributed the most to rising monthly inflation, 0.5 percentage points each. In the group of food, prices of oil and fats increased the most (by 7%), followed by meat (by 6.3%), vegetables (by 5.2%) and bread and cereal products (by 2.9%). Electricity was also more expensive than in the previous month (by 11.6%), contributing 0.3 percentage points to inflation. Rising prices of clothing and footwear (by 3.8%) increased headline inflation by additional 0.3 percentage points. 0.2 percentage points were added by more expensive liquid fuels (by 20.4%). At 0.1 percentage points each was the contribution of following price increases: cigarettes (by 2.5%), rents (by 6.2%), waste collection (by 9%), gas (by 5.8%), rental of garages, car parks and passenger cars (by 16.6%), residential and household equipment and current maintenance of dwellings (by 1%), catering services (by 1%) and miscellaneous goods and services (by 0.8%). In one year (April 2022/April 2021), prices (CPI) increased by 6.9% on average. The average 12-month growth was 4%. Prices of goods increased on average by 7.9% and prices of services by 5%. Consumer goods went up by 9.1%, durable goods by 8.8% and semi-durable goods by 2.7%. Source: SORS.
Net electricity production in Slovenia in March 2022 amounted to 1,223 GWh and was higher by 16% compared to February 2022, while compared to March 2021 it was lower by 8%. Compared to March 2021, the production in hydropower plants decreased by 45%, in thermal power plants by 12% and in nuclear power plant by 1%. Total fuel consumption was thus 20% higher in March 2022 than in March 2021, as a result of increased population mobility due to the withdrawal of containment measures.
More economic topics are below in the attachment.
According to seasonally adjusted data, GDP in the EU-27 increased by 0.4% in the Q1 2022, which was lower than our expectations (+0.5%), but higher than the central estimate on the Refinitive (+0.3%). This growth was slightly lower than in the Q4 2021 (+0.5%). In terms of quarterly GDP change (first estimates are available for 11 countries), Portugal (+2.6%), Austria (+2.5%) and Latvia (+2.1%) stood out. France’s GDP hasn’t changed and Italy’s fell by 0.2% (Sweden’s GDP declined by 0.4%). These figures alone do not say much, as quarterly GDP is to some extent a volatile category and without detailed insight a more detailed analysis does not make sense. Source: Eurostat.
According to the first estimate, US GDP contracted by 0.4% in the Q1 2022 compared to the Q4 2021 (1.4% on an annualised level), which was a negative surprise. A second estimate will be available on 26 May 2022. The decline is mainly due to lower investment in inventories, exports and government consumption, while imports increased, mainly due to growth in private consumption and investment. The decline in inventories was due to lower inventories in the wholesale and retail trade of motor vehicles, which was due to weak vehicle production due to a lack of semiconductors. Exports of non-durable goods decreased (with a maturity of up to six months), which was also due to the strong dollar (which reduces the competitiveness of US exports), while exports of financial services increased. The decline in government consumption was mainly due to a drop in defence spending on intermediate goods and services, as well as lower fiscal support for US households. The increase in imports was due to the growth of imports of durable goods, especially consumer goods and capital goods. In private consumption, growth in health expenditure stood out, while Americans spent less on goods, resulting in both production delays and higher service consumption targets. Investments in fixed assets and investments in equipment and intellectual property stood out, reflecting the good state of American industry. The disposable income of American households increased by 4.8% but fell by 2% in real terms due to high inflation. The savings rate (6.6%) decreased compared to the Q4 2021 (7.7%). Source: U.S. Bureau of Economic Analysis.
A phase out of Russian oil may be less effective than a tariff at reducing Putin’s rents; Simone Tagliapietra, Guntram B. Wolff and Georg Zachmann; Opinion; Bruegel; 2 May 2022. Available at: https://www.bruegel.org/2022/05/a-phase-out-of-russian-oil-may-be-less-effective-than-a-tariff-at-reducing-putins-rents/
Comment/Abstract: The European Union’s plan to target Russian oil in the context of its latest sanctions package makes sense as a way to step up pressure on Moscow. Oil is a major source of hard currency for Russia, and since the introduction of financial sanctions has become a vital lifeline for the Russian economy and a crucial funding source for the war. The EU is reportedly considering an embargo on Russian oil, as opposed to a price cap or tariff. Russian oil could be banned by the end of the year, with restrictions on imports introduced gradually until then. This is far from the best option according to the authors. Reducing purchases of Russian oil to zero over time might leave Russian revenues high while implying several negative short- and long-term consequences for the EU. Paradoxically, such an embargo might even result in a win for Russia, at least in the short-term, and a loss for the EU and the world’s economy overall.
Exports of goods, Slovenia, March 2022, (5 May), Statistical Office of RS; EUR 4.2 bn
Comment: We expect nominal exports to hold up well (about 20 % rise year on year), mainly due to rising prices of goods and increasing international trade due to removal of restrictiveness measures. Rising trade in energy commodities should add to this figure, whereas we see a clear slowdown in real growth of exported domestic produced industrial goods.
“If everyone fought for their own convictions there would be no war.”
(Leo Tolstoy, War and Peace)