Macroeconomic Forecast Slovenia

Inflation in Slovenia ticked higher to 2.3% y-o-y in August, up from 2.1% in July and 0.0% over the same period in 2009. Food price growth continued to be the main contributing factor to inflationary pressures, rising by 2.9% y-o-y in August. Demand conditions in Slovenia are unlikely to recover strongly through the medium term, as credit conditions remain tight on the back of protracted balance sheet repair in the local banking system. As such, despite the move higher in consumer price growth, we hold to our forecast for inflation in Slovenia to fall back to 1.7% y-o-y by end-2010

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