Failing to reflect a slight drop in the euro area, the annual inflation rate in Slovenia picked up by another 1.2 percentage points in March to reach 10.5%. The rate's increase equals the impact stemming from a 49% year-on-year increase in electricity prices as price mitigation-measures introduced a year ago were partly scrapped.

Although prices stayed fairly level at the monthly level, Slovenia's annual inflation rate was the highest since last August and could possibly get worse as core inflation in the euro area reached a new record high in March.

The main driver behind the annual growth in Slovenia, along with electricity prices, was a 19.1% increase in food prices. Meat prices rose by 18.2%, bread and cereal products by 20.1% and milk, cheese and eggs by 24.4%. The prices of goods increased by 12.4% on average, while the prices of services rose by 6.9%

The March trend in Slovenia failed to follow the figures for the Eurozone, where annual inflation fell to 6.9% in March from 8.5% in February, according to preliminary data.

Higher prices of food, alcohol and tobacco were the main driving force, with the climb in this segment speeding up by 0.4 percentage points since February to 15.4%. Notably, energy prices in the euro area were 0.9% lower than a year ago, after seeing a 13.7% annual rise in February.

However, also when excluding energy and food prices, inflation in the euro area was at 5.7% in March, which has been a cause for concern for the European Central Bank, as rising core inflation indicates inflationary pressures are becoming increasingly entrenched across the economy.

This increases the risk of a wage-inflation spiral and prolonged inflation. Such a scenario could lead to a long-term lowering of living standards.