Weak Euro Will Prevent Another Bout Of Deflation

Despite a lacklustre recovery and expectations for global demand growth to turn downwards again in H210, we maintain that another period of deflation is unlikely in Slovenia. We hold to our end-year consumer price growth forecasts of 1.7% and 2.3% for 2010 and 2011 respectively. Euro weakness in particular, is likely to ensure that the key food and energy price components of the consumer price basket remain elevated.

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