BRATISLAVA, February 14, (WEBNOVINY) – The January price growth in Slovakia was not extraordinary, opines the Finance Ministry. According to the ministry’s State Secretary Vladimir Tvaroska, the y/y inflation acceleration to three percent is definitely not pleasant, but the price increase in Slovakia at the beginning of the year has always been over three percent since 2002. The only exception was the crisis year of 2010. “In all previous years, regardless of whether it was in the era of Dzurinda or Fico, prices in January always grew by more than three percent,” Tvaroska told Monday’s news conference.
The finance department admits that behind the price growth were also consolidation measures adopted by the government. The impact of indirect taxes rise on price growth reached 0.54 percent, the ministry says. According to head of the ministry’s Financial Policy Institute (IFP) Jan Toth, the thus-far data hint that the increase in the value-added-tax rate by one percentage point contributed forty-percent to price hikes. Therefore, approximately sixty percent of the VAT increase affected merchants’ margins.
The development on the market of foodstuffs prices however had the greatest impact on inflation acceleration,, in particular due to last year’s poor crop . According to Tvaroska, the growth in food prices is a global phenomenon. “Food prices in Slovakia copy the development of world prices,” he stressed. Another factor contributing to inflation growth was an increase in regulated prices from the start of this year.
Furthermore, the ministry adds that there are specific reasons behind the price increase in Slovakia. In the case of electricity, it is the tariff for operating the system within the electricity price, through which the state subsidizes various types of electricity generation. Thus, consumers have to pay approximately 320 million euro to producers, while these fees considerably increase the price of electricity. „Unfortunately, these fees, due to very badly set regulation in the last period, have considerably risen as of January of this year,” Tvaroska commented. The ministry also opines that the long-term contract of the natural gas utility SPP with the Russian gas supplier Gazprom, based on which SPP has to pay much more for gas than based on the previous contract had also negative impact on prices. The state secretary adds that the increased price significantly burdens the natural gas utility, and gradually also Slovak consumers.
As expected growth of prices in Slovakia accelerated at the beginning of the year. According to Statistics Office data, January y/y inflation measured by national methodology reached 3 percent, which was 1.3 percent in December. In a month-on-month comparison, consumer prices rose 1.9 percent in January. Year-on-year, prices of food and soft drinks increased by 6.1 percent, education by 4.5 percent, transport by 4 percent, housing, water, electricity, gas and other fuels by 3.7 percent and health care services by 3.5 percent.
SITA