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Strengthening crown dampens inflation, but not for long

Inflation in Slovakia was dampened by the significant strengthening of the Slovak crown after the official crown/euro changeover rate was set, but price developments on global markets will affect inflation estimates for the rest of this year and in the future, it was announced on September 25.

Inflation in Slovakia was dampened by the significant strengthening of the Slovak crown after the official crown/euro changeover rate was set, but price developments on global markets will affect inflation estimates for the rest of this year and in the future, it was announced on September 25.

"Thanks to the crown’s appreciation, it was partially possible to dampen the growth of inflation, but this effect won't be possible in the long-term - at least until the first half of next year," the Financial Policy Institute (IFP), an analysis department of the Finance Ministry, stated in a report.

The estimate for harmonised inflation for 2008 has grown by 0.2 percentage points to 4 percent and by 0.5 percentage points to 3.9 percent for 2009.

"The main factors (influencing inflation) include the global increase in the price of food, oil and other commodities, and also the expected regulation of prices (in Slovakia) in 2009," the IFP wrote.

But the IFP added that it's difficult to estimate regulated prices, as this issue is currently a subject of political debate rather than an economic one. TASR

Compiled by Zuzana Vilikovská from press reports
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