BRATISLAVA, March 14 (Reuters) - Slovak EU-norm consumer
prices rose by 0.3 percent on the month in February, putting the
annual inflation rate at 3.4 percent, the Slovak Statistics
Office said on Friday.
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KEY POINTS:
SLOVAK EU-NORM INFLATION FEB 08 FEB 08 FORECAST
pct change mo/mo +0.3 +0.2
pct change yr/yr +3.4 +3.3
(Details of Dec inflation data .............[])
- Food and non-alcoholic beverages rise by 0.5 percent
month-on-month, slowing down from a 2.1 percent increase in
January.
- Housing, water, electricity, gas and other fuel prices rise by
0.1 percent in February, after a 1.9 percent rise in the
previous month.
- Transportation prices rise by 0.3 percent month-on-month,
after a 1.5 percent increase in January.
- The food and non-alcoholic beverages category is up 7.2
percent on the year.
- Annual price growth in the housing category is 2.7 percent in
February.
ANALYST COMMENT:
PIOTR MATYS, ANALYST, 4CAST, LONDON
"The breakdown shows that all key driving components fell in
February ... The data support the view that Slovakia's 12-month
average HICP at 2.1 percent in February will remain well below
the reference rate (for euro zone entry)."
"As for the central bank, with inflation still driven by
cost-push factors, we expect the bank to leave the rates
unchanged at 4.25 percent in March and in fact in H1, before
gradual adjustment in H2 to the euro zone level."
EDUARD HAGARA, ANALYST, ING BANK, BRATISLAVA
"It's a bit of a surprise, after yesterday's local inflation
data, we expected annual inflation of 3.2 percent. Apparently,
those items that rose have different weighting in the HICP and
local inflation."
"There are no signs of demand-led inflation pressures.
Slovakia is still well below the reference value (for euro
adoption)."
"We expect the reference value to be 3.1 percent on the year
in February, while the Slovak 12-month annual average is 2.1
percent."
MARKET REACTION:
The crown traded at 32.345 to the euro <EURSKK=> after
inflation data, virtually unchanged from 32.360 early in the
session.
BACKGROUND:
- The central bank (NBS) follows inflation calculated by the EU
methodology as part of Slovakia's plan to adopt the euro in
2009.
- Prices under the local methodology, released on Thursday,
showed a 0.4 percent monthly and 4.0 percent annual rise in
February.
- Slovakia aims to meet all criteria for euro adoption in
spring. The central bank predicts the EU-norm inflation rate of
2.8 percent at the end of 2008.
- Slovak price growth has accelerated in the past few months,
mainly on rising cost of food and energies, but the inflation
rate is expected to be safely under the threshold for euro
adoption at the time of assessing Slovakia's readiness.
- The central bank left its key two-week repo rate at 4.25
percent in February, maintaining steady borrowing costs for the
10th month in a row.
LINKS:
- For further details on February inflation and other past data,
Reuters 3000 Xtra users can click on the Slovak Statistics
Office's website:
http://wwww.statistics.sk/webdata/english/index2_a.htm
- For LIVE Slovak economic data releases, click on......<ECONSK>
- Schedule of upcoming indicator releases............<SK/ECON09>
- Summary of short-term economic data forecasts......<SK/ECON04>
- Stories on Slovak currency moves........................[]
- Slovak speed money guide ................................<SKK>
- Slovak benchmark state bond prices .................<0#SKBMK=>
- Slovak forward money market rates ....................<SKKFRA>
(Reporting by Peter Laca and Martin Santa, editing by David
Stamp)
