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Slovak economists expect price jumps after euro

Most economists surveyed by the TASR newswire said joining the euro on January 1, 2009 would have an inflationary effect in Slovakia, and inflation could be as high as four percent in the first years after entry.

According to the survey, inflation will no longer be suppressed by the strengthening of the domestic currency (Sk), and there will also be other effects that are not directly connected to the transfer to the euro. Among these are the development of oil prices, the USD/EUR exchange rate, government fiscal policy and the harvest quality in a given year.

Most analysts surveyed by TASR estimate inflation in the first years after the planned entry into the euro zone in 2009 to be in the three to four percent range, whereas in 2008 it should be around two percent.

It's also necessary to account for the influence of normal inflationary pressures such as the introduction of energy taxes, consumption tax on cigarettes going up, and higher prices for food and energy, said VÚB economist Martin Lenko.

Euro introduction will also lead to price increases due to rounding up prices, which according to the National Bank of Slovakia (NBS) should amount to 0.2 to 0.3 percentage points.

Compiled by Zuzana Vilikovská from press reports
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