Friday, November 23, 2007

Slovenia struggling with inflationary pressures.

Here is yet another Eastern European country struggling to control inflation.

LJUBLJANA, Nov 23 (Reuters) - An inflation spike following Slovenia's adoption of the euro has exposed weaknesses in the economy and fiscal policy and is a warning to eurozone aspirants to ensure deep reforms are in place before accession.

Although it is the richest of East Europe's ex-communist states, Slovenia, which joined the single currency in January this year, has a history of struggling with inflation, both when it was part of communist Yugoslavia and since independence in 1991.

In October the headline rate jumped to 5.1 percent, nearly double the average eurozone rate and up from 1.6 percent in the same month of last year. While consumer prices have been rising across the continent, analysts said the larger jump in Slovenia shows how the economy is struggling to cope with the competitive pressures that accompanied joining the euro zone.