Page 40 - CE Outlook Regions 2023

2.6.3 Inflation and monetary policy

Inflation in November reached 15.4%, which is the highest level in more
than two decades and above the Eurozone average of 10.6%. y/y
inflation has been on the rise since January. The European
Commission projected average annual inflation of 13.9% in 2023 after
averaging 11.5% in 2022.

Food prices were up by 29% y/y in November. When speaking at a
Joint Vienna Institute webinar in mid-December, deputy governor of the
National Bank of Slovakia (NBS) Ludovit Odor estimated that food
prices represent some 50% of the inflation basket in Slovakia. In its
winter forecast, NBS expects inflation to remain above or at 10%
throughout 2023.

In total for January-November 2022 consumer prices in households of
employees increased by 12.5% y/y, in low-income households by
12.8%, and households of pensioners by 13.6%. The high inflation level
saw real wages drop across all monitored sectors of the economy for
the first time in October.

High energy prices are still expected to be fully translated into
consumer prices. Secondary effects from the supply side shocks will
also continue to keep inflation high. NBS expects inflation to ease in the
second half of 2023.

Slovakia is a eurozone member country and the European Central
Bank (ECB) could see more hikes in interest rates in 2023.

2.6.4 Industrial production

In January-October 2022 industrial production dropped by 3.2% y/y.
The latest figures for October 2022 show that industrial production
decreased by 2.6% y/y but increased by 1.3% m/m.

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