Page 71 - bne IntelliNews Southeastern Europe Outlook 2025

raised by a total of 550 basis points, peaking at 6.5% in mid-2023.
In 2024, as inflationary pressures began to moderate and the European Central Bank (ECB) initiated monetary easing, the NBS followed suit, lowering its key policy rate to 5.75% by September. However, persistent inflation prompted the central bank to hold rates steady through December, indicating a cautious approach going into 2025.
Inflation is projected to continue its gradual decline in 2025, with the International Monetary Fund (IMF) forecasting an average rate of 3.6% and the European Commission projecting 3.7%. While still relatively high by European standards, these figures indicate significant progress compared to previous years.
This outlook is supported by the easing of energy prices, which were a key inflationary driver in previous years. Nevertheless, the NBS is expected to proceed cautiously with monetary easing, prioritising the stabilisation of core inflation before further rate cuts.
Maintaining exchange rate stability will remain a cornerstone of the NBS’ policy. Regular interventions in the foreign exchange market to uphold the dinar’s peg to the euro are likely to continue. Over the medium term, further interest rate reductions will depend on inflation, as well as external factors such as ECB policy decisions and global commodity price trends.
4.11 Inflation & Monetary Policy – Slovenia
The European Commission has projected a slight acceleration in inflation for 2025, to 3.2%. This increase is attributed to the reintroduction of charges on electricity bills, which had been temporarily suspended during the energy price crisis, as well as rising grid fees.
Services inflation is expected to remain notably high in 2025, driven by rapid wage growth. However, a gradual easing is anticipated in 2026, with inflation forecast to decline to 2.1%.
In the first eleven months of 2024, Slovenia recorded an annual inflation rate of 2%. The consumer price index (CPI) rose by 1.8% y/y in November 2024, following a flat reading the previous month, according to data from the statistics office. This is a significant decline from the 4.9% inflation rate registered in November 2023. The annual increase was largely driven by a 2.3% rise in food and non-alcoholic beverage prices, which contributed 0.4 percentage points (pp) to the overall inflation rate.
Inflation peaked at 7.2% in 2023 but slowed significantly as the year progressed. This downward trend has persisted into 2024, with inflation projected to decline further to 2.1% for the entire year.
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