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Entry to the Eurozone – Slovenia

Entry to the Eurozone – Slovenia. Mojca Maček Kenk, Head of CPI/HICP Department. Introduction of the euro in Slovenia. Criteria for the introduction of the euro. A low inflation rate Sound public finances Low interest rates Stable exchange rates. Fulfilling the inflation criteria.

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Entry to the Eurozone – Slovenia

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  1. Entry to the Eurozone – Slovenia Mojca Maček Kenk, Head of CPI/HICP Department

  2. Introduction of the euro in Slovenia

  3. Criteria for the introduction of the euro • A low inflation rate • Sound public finances • Low interest rates • Stable exchange rates

  4. Fulfilling the inflation criteria

  5. Organisation of transition implementation - government • Programme for ERM II Entry and Adoption of the Euro • Masterplan for Introduction of the Euro • Masterplan for the Euro Changeover • Communication Strategy on the Introduction of the Euro • Change of legislation: • Euro Adoption Act • The Act on Dual Display of Prices • Document: Euro price code • The government commitment to preclude price rises

  6. Organisation of transition implementation - SORS • In May 2005 appointment of the project group for euro adoption at the Statistical Office of the Republic of Slovenia • Preparation of project documentation • Euro website (www.stat.si/evro.asp), which is linked to the general website www.evro.si • Appointment of the subgroup for prices • Signing of the co-operationagreement between SORS, the MINISTRY OF THE ECONOMY and the SLOVENE CONSUMERS’ ASSOCIATION

  7. Organisation of transition implementation - Slovene Consumers’ Association • Pricewatch (104 goods and services in the basket): from February 2006 the pricewatch is conducted every three months in every region in Slovenia • Euro website (www.evropotrosnik.si) and consumers europhone: common point where consumers can report noted price rises • In the middle of December they started to publish a “black list” of providers of goods and services that increased prices by more than 6 percent • Regular press conference where they report their results

  8. Organisation of transition implementation – SORS: PRICES • From April 2006: preparation and publication of additional analyses www.stat.si/evro_spremljanje_analize.asp • From May 2006: personal inflation calculator www.stat.si/orodja_osebnainflacija.asp • From December 2006: informative conversion of prices intoeuro www.stat.si/pxweb/Database/EUR_eng/EUR_eng.asp • 29 December 2006: detailed presentation of December data at a press conference • 10 January 2007: release of special Rapid Reports www.stat.si/eng/novica_prikazi.aspx?id=668 • 9February 2007:detailed presentation of January data at a press conference

  9. Additional analysesabout price movements The analyses of price changes in individual months focused on three aspects: • Detailed list of subgroups of goods and services in which changes in prices had the greatest impact on the total inflation rate. • Detailed list of subgroups of goods and services with the greatest price deviations compared to the average of the past five years. • At the end of each quarter a list of subgroups of goods and services with the greatest price deviations compared to the same period in the past five years.

  10. The treatment of the changeover to euro in the CPI/HICPwith the index for January 2007 We followed Eurostat recommendations: • Until and including December 2006 prices were collected in national currency. • From January 2007 on prices are collected in euros. • Euro prices in January 2007 were compared directly to the reference prices (December 2006); • for conversion the official conversion rate was used and these converted reference prices were rounded to five decimals.

  11. Monthly rate of change in December, 2004-2006

  12. Monthly rate of change in January, 2005-2007

  13. Subgroups of goods and services the prices of which had the greatest impact on inflation in December 2006 and January 2007 (in percentage points)

  14. Subgroups where the monthly price increase in December 2007 was higher than in the previous years in December (in %)

  15. Subgroups where the monthly price increase in January 2007 was higher than in the previous years in January(in %)

  16. Rice, medium grains (kg) Espresso in restaurants, cafes 2007 2007 Hair cutting for men Quality wine in restaurants (l) 2007 2007

  17. Impact of the changeover on inflation: (According to our Statistical Office and the Slovenian Institute for Macroeconomic Analysis and Development-IMAD) • No general rise in prices due to euro adoption • Most rises in prices related to euro adoption happened in December 2006 and January 2007 • Due to euro adoption higher prices of services in hotels and restaurants and some other services • According to first estimates from IMAD, the total effect of euro adoption on prices was about 0.24 of a percentage point

  18. Contributions to inflation of price rises related to the euro changeover in Slovenia Note: *Estimated value. Source: SORS; calculations IMAD.

  19. Conclusions: • Good and timely preparation on global level is very important • Good co-operations between all institutions connected with prices and inflation • Distribution of work among them

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