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Policy Briefs

Policy Briefs are concise analytical pieces that emerge from policy work of economists and researchers across different departments of the National Bank of Slovakia. These texts either frame policy thinking within the bank or summarize our expertise on a specific topic that we would like to share with experts in the area (10 to 15 minutes read).

The views expressed are those of the authors and do not necessarily reflect those of the NBS.

No. 2

23. 1. 2023

When food bites back

André Casalis

  • Abstract

    Markups for firms operating in food and beverages manufacture and sales sectors have increased in the first half of 2022, suggesting a decoupling between the increase in current production costs and prices. The evolution of markups in the period between the first quarter of 2015 and the second quarter of 2022, a high-inflation environment, shows, on one hand, a very recent dynamic evolution of the price setting behaviour displayed by food-related businesses, and on the other the remarkable stability of markups observed at broad aggregate level in the largest sectors of the Slovak economy.

No. 1

31. 8. 2022

Direct impact of energy price increases on firm profitability and producer prices

Ján Klacso, Tibor Lalinský

  • Abstract

    Increasing energy prices represent one of the main drivers of the recent increase of HICP inflation to double-digit figures. In this Policy Brief we focus on the first-round effects of increased energy prices on Slovak firms. Our results based on firm level data suggest that increasing energy prices may have a significant direct impact on the profitability of many firms. Without adjusting their prices, the number of firms reporting losses could increase substantially as a result of energy price increases. Moreover, almost all firms with high energy costs would end up with a loss. Therefore, we assume firms transmit increased energy costs to producer prices. The direct effect may reach up to 8% in some sectors to compensate for higher input costs if energy prices double. As energy intensive industries are important suppliers to other domestic industries, we may also expect significant upward second-round effects on producer prices and ultimately increasing consumer prices.

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