(Adds central bank comments in paragraphs 6-7)
By Martin Santa
BRATISLAVA, Feb 29 (Reuters) - The Slovak inflation rate
jumped to a 13-month high in January on rising energy and food
costs, data showed on Friday, but analysts saw no risk of
breaching the price growth limit for euro adoption.
Inflation, calculated by EU methodology, was 3.2 percent
year on year in January, the highest since December 2006,
compared with 2.5 percent seen in December, the Slovak
Statistics Office said.
Inflation was 1.2 percent on a monthly basis, after 0.3
percent in December. Both the monthly and annual rates were
above market forecasts of 0.8 percent and 2.8 percent inflation
respectively.
"In terms of the structure, regulated prices and food prices
were behind the move, which was also the case with (local) CPI
figures," said Eduard Hagara, an analyst with ING Bank in
Bratislava.
Food and non-alcoholic beverages, which have a strong
weighting in the consumer price basket, rose by 2.1 percent
month-on-month, after a 0.8 percent increase in December.
The central bank (NBS) said January inflation reading was
above its forecasts mainly because state-regulated heating,
transport and healthcare prices rose faster than expected. It
added food and petrol prices were a touch higher as well.
"The annual dynamics of overall inflation should accelerate
slightly in February 2008 against January 2008, mainly because
of faster growth in prices of petrol fuels, food and regulated
transport prices," the NBS said in a statement.
Inflation is the key challenge for Slovakia in its planned
adoption of the euro in 2009 as the first central European
nation.
Despite accelerating price growth, Slovakia is still under
the threshold for euro adoption, which is defined as 1.5
percentage points above the average of three lowest inflation
rates in the EU.
"The 12-month average is around 2.0 percent, and we are
comfortably below the Maastricht level," said Maria Valachyova,
the senior analyst at Slovenska Sporitelna.
"We will have a comfortable margin at the time of the
assessment in March or April," she added.
Slovakia will also have to convince EU authorities it can
keep price growth under control after entering the single
currency area.
The central bank (NBS) has said it sees no strong demand-led
pressures on prices in the booming economy, and analysts did not
expect any monetary policy reaction to faster inflation.
"Pressure from food is likely to prevail in coming months,
but we don't expect the NBS to hike rates and the next move will
have to be a cut as Slovakia will have to adjust its rates to
the euro zone level in H2," said Piotr Matys analyst with 4Cast.
The NBS left interest rates on hold on Tuesday, keeping the
main two-week rate at 4.25 percent for the 10th month in a row.
