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Inflation exceeds central bank's projections

Inflation in Slovakia in June exceeded the National Bank of Slovakia’s (NBS) projections. The central bank wrote in its statement that energy prices, particularly those of motor fuel and heating, grew faster than forecast. Price growth in food was also higher than expected. Consumer prices grew by 4.3 percent year-on-year (y/y). Headline inflation excluding energy and unprocessed food reached 4.1 percent, compared with 4 percent in May. In monthly terms, prices increased by 0.4 percent, and prices excluding energy and unprocessed food by 0.2 percent. Average twelve-month inflation from July 2007 to June 2008 was 2.8 percent. Average inflation since the beginning of the year stood at 3.7 percent. The year-on-year growth rate of headline inflation is set to rise moderately under the influence of faster-than-anticipated price growth in manufactured products, the SITA newswire wrote. And food prices are set to post the fastest growth due to the ongoing rise in the price of pork. The effect of higher cigarette prices could also play out, according to the NBS.

Inflation in Slovakia in June exceeded the National Bank of Slovakia’s (NBS) projections. The central bank wrote in its statement that energy prices, particularly those of motor fuel and heating, grew faster than forecast. Price growth in food was also higher than expected. Consumer prices grew by 4.3 percent year-on-year (y/y). Headline inflation excluding energy and unprocessed food reached 4.1 percent, compared with 4 percent in May. In monthly terms, prices increased by 0.4 percent, and prices excluding energy and unprocessed food by 0.2 percent. Average twelve-month inflation from July 2007 to June 2008 was 2.8 percent. Average inflation since the beginning of the year stood at 3.7 percent. The year-on-year growth rate of headline inflation is set to rise moderately under the influence of faster-than-anticipated price growth in manufactured products, the SITA newswire wrote. And food prices are set to post the fastest growth due to the ongoing rise in the price of pork. The effect of higher cigarette prices could also play out, according to the NBS.

According to Volksbank Slovensko analyst Vladimír Vaňo, the data shows that it would be appropriate to open up a discussion on future inflation and its influence on growth, as well as on the secondary inflationary pressures of higher prices of energy and food. The maintenance of last year's stable development in average wage growth is a decisive assumption for the prognosis of harmonised inflation peaking in late 2008. Vaňo added that the European Central Bank has lately been keeping an eye on both these factors. With older euro zone members, it may be assumed that slowing growth in 2008 will have a "correcting" influence on wage growth dynamics, one of the inflationary risks. But there is no talk of such an effect in the case of Slovakia, with its ongoing, above average, strong growth. SITA

Compiled by Zuzana Vilikovská from press reports
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