Entry to the Eurozone –

Slovenia

Mojca Maček Kenk, Head of CPI/HICP Department

Introduction of the euro in SloveniaIntroduction of the euro in Slovenia

Criteria for the introduction of the euroCriteria for the introduction of the euro

• A low inflation rate

• Sound public finances

• Low interest rates

• Stable exchange rates

Fulfilling the inflation criteriaFulfilling the inflation criteria

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

VII04

IX04

XI04

I05

II I05

V05

VII05

IX05

XI05

I06

II I06

V06

VII06

IX06

XI06

I07

%

HICP SloveniaConvergence criterion

Organisation of transition Organisation of transition implementation - governmentimplementation - 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

Organisation of transition Organisation of transition implementation implementation - SORS- 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-operation agreement between SORS, the MINISTRY OF THE ECONOMY and the SLOVENE CONSUMERS’ ASSOCIATION

Organisation of transition implementation - Organisation of transition implementation - Slovene Consumers’ AssociationSlovene 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

Organisation of transition implementation 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 into euro

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

• 9 February 2007: detailed presentation of January data at a press conference

Additional analyses about 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.

The treatment of the changeover to euro in The treatment of the changeover to euro in the the CPI/CPI/HICPHICP

with the index for January 2007with 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.

Monthly rate of change in Monthly rate of change in December,December, 200 20044-200-20066-4 -3 -2 -1 0 1 2 3 4

Total

1-Food and non-alcoholicbeverages

2-Alcoholic beverages andtobacco

3-Clothing and footwear

4-Housing, water, electricity andother

5-Furnishing, household equip.and maint.

6-Health

7-Transport

8-Communications

9-Recreation and culture

10-Education

11-Restaurants and hotels

12-Miscellaneous goods andservices

%

dec.04dec.05dec.06

Monthly rate of change in JanuaryMonthly rate of change in January,, 2005-2007 2005-2007-14 -12 -10 -8 -6 -4 -2 0 2 4

Total

1-Food and non-alcoholicbeverages

2-Alcoholic beverages andtobacco

3-Clothing and footwear

4-Housing, water, electricity andother

5-Furnishing, household equip.and maint.

6-Health

7-Transport

8-Communications

9-Recreation and culture

10-Education

11-Restaurants and hotels

12-Miscellaneous goods andservices

%

jan.05jan.06jan.07

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

-0,28

-0,20

-0,12

-0,08

-0,06

0,03

0,03

0,04

0,04

0,05

0,05

0,05

0,06

0,07

0,29

-0,40

-0,5 -0,4 -0,3 -0,2 -0,1 0,0 0,1 0,2 0,3 0,4

Women's clothes

Men's clothes

Shoes and other footwear

Children's clothes

Liquid fuels

Motor fuels

Main courses (in restaur.)

Soft drinks

Gardens, plants and flowers

Maint. and repair of motor vehicles

Package holidays

Alcoholic beverages (in restaur.)

Non-alcoholic beverages (in restaur.)

Recreational services

Refuse collection

Fresh vegetables

Subgroups where the Subgroups where the monthly monthly price increase price increase in in December December 2007 was higher than in 2007 was higher than in the the

previous years in December previous years in December (in %)(in %)

2002 2003 2004 2005 2006

Impact in December 07 in percent. points

Services in restaurants and cafes 0.1 0.3 0.1 0.0 3.2 0.12

Repair of household equip.0.0 0.0 0.0 0.1 2.4 0.00

Computer equipment -3.4 -0.2 0.2 0.1 1.7 0.01

Out-patient services 1.3 1.3 0.0 0.0 1.7 0.02

Personal services 0.0 -0.9 0.0 0.5 1.4 0.01

Repairs of equipment and accessories 0.0 0.0 0.0 0.0 0.4 0.00

Subgroups where the Subgroups where the monthly monthly price increase price increase in January 2007 was higher than in in January 2007 was higher than in the the

previous years in previous years in JanuaryJanuary (in %)(in %)

2002 2003 2004 2005 2006 2007Impact in

Janury 07 in pts

Recreational and sport services 0.3 0.0 0.2 1.2 0.3 3.5 0.03

Personal services 2.3 0.0 0.0 -0.1 1.3 2.7 0.02

Footwear services 0.0 0.0 0.0 0.0 0.4 2.3 0.00

Repair of household equip. 0.8 0.0 0.0 0.7 0.0 2.1 0.00

Services in restaurants and cafes 1.1 1.2 0.2 0.5 0.5 2.0 0.07

Repairs of equipment and accessories 0.9 0.1 0.8 0.0 0.0 1.2 0.00

Services related to means of transport 0.9 0.2 0.2 0.1 0.1 1.0 0.01

Espresso in restaurants, cafes

0,880,88

0,78

0,79 0,79 0,79

0,80,81

0,82 0,820,83 0,83 0,83

0,86

0,72

0,74

0,76

0,78

0,80

0,82

0,84

0,86

0,88

0,90

I I I I I I IV V VI VI I VI I I IX X XI XI I I I I2006

Eu

r

Rice, medium grains (kg)

1,721,71

1,81

1,77

1,79

1,81

1,78

1,83

1,74

1,75

1,78

1,81

1,66

1,74

1,60

1,65

1,70

1,75

1,80

1,85

1,90

I I I I I I IV V VI VI I VI I I IX X XI XI I I I I2006

Eu

r

Quality wine in restaurants (l)

8,258,24

7,29 7,297,38 7,38 7,38 7,46

7,51 7,51 7,56 7,56 7,57

7,92

6,00

7,00

8,00

9,00

I I I I I I IV V VI VI I VI I I IX X XI XI I I I I2006

Eu

r

Hair cutting for men

12,2812,28

10,7

11,1711,22 11,22

11,29 11,29 11,29 11,29 11,2911,41

11,44

11,75

10,00

10,50

11,00

11,50

12,00

12,50

13,00

I I I I I I IV V VI VI I VI I I IX X XI XI I I I I2006

Eu

r

2007 2007

20072007

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

Contributions to inflation of price rises related to the euro changeover in Slovenia

December 2006

January 2007

February 2007*

Total*

Other services0.03 0.04 0.07

Services in restaurants and cafes

0.10 0.05 0.01 0.16

Total0.13 0.10 0.01 0.24

Note: *Estimated value.

Source: SORS; calculations IMAD.

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