PRICES that Slovaks paid for goods and services in June were 0.7 percent higher than those in June 2009. Consumer prices in Slovakia, as measured by the European Union’s Harmonized Index of Consumer Prices (HICP) showed no monthly change in June, less than the small increase recorded in May, the Slovak Statistics Office reported in mid July.
The average twelve-month inflation rate remains at a historical low of 0.3 percent. Consumer prices measured by the EU methodology showed no change in monthly terms in June while they had risen in May by 0.1 percent from April, the SITA newswire wrote. The difference in the national and EU-harmonised methodology is due to a different composition of the price-monitored products.
Prices of alcoholic beverages and tobacco showed the highest price increases on an annual basis in June at 7.5 percent. The Statistics Office also reported growth in prices in the education and health-care sectors, both increasing by 4.5 percent. In contrast, prices of furniture, home furnishings and common home maintenance dropped 3.6 percent year-on-year under the EU methodology.
Prices for education services grew the most in a month-on-month comparison by1.4 percent. The Statistics Office reported a decline of 0.3 percent in the prices of foodstuffs and soft drinks. Prices of furniture, household furnishings and ordinary home maintenance and in the transportation sector all ticked down 0.2 percent in the month.
Sub: National statistics
According to the national methodology, the annual inflation rate in Slovakia fell from 1.2 percent in May to 1 percent in June. The Slovak Statistics Office reported price increases primarily for alcoholic beverages and tobacco which went up 6.6 percent over the year. Slovaks also paid more for education and health services, up 4.2 and 4 percent, respectively. There were lower prices for furniture, other home furnishings, footwear and clothing, SITA wrote.
Core inflation, which monitors consumer prices without regulated prices and administrative interventions into prices or taxes, was at an annual rate of 1.1 percent in June compared with 1.5 percent a month earlier. On a month-to-month basis, the core inflation rate was zero.
Net inflation, which does not include food prices, decreased from May’s rate of 1.5 percent to June’s rate of 0.9 percent on an annual basis. In a monthly comparison, net inflation was unchanged from the level of May.
Sub: Analysts expect moderate inflation
Economic analysts said the current level of consumer prices in Slovakia corresponds with the development of retail sales.
“Over the course of this year, with the exception of March’s 0.2 percent growth, these [price increases] were below the previous year’s levels,” Eva Sadovská, an analyst with Poštová Banka, told the TASR newswire. “The reason is the still relatively high, though decreasing unemployment.”
Analysts expect that consumer prices will grow only moderately during the coming months.
“The relatively high number of jobless people will be the reason not to increase prices in stores,” said Sadovská.
Ľubomír Koršňák, an analyst with UniCredit Bank, expects a moderate acceleration in the inflation rate up through the end of the year.
“Prices of food and motor fuels and the weakening euro, as well as the floods, moderately increase pro-inflation risks during the second half of 2010,” he said, estimating the end-year annual inflation rate to be at 1.9 percent.
Accelerating inflation will also influence the level of real wages.
“Our estimate of the average growth of wages this year remains at 3.1 percent,” said Koršňák. “After inflation is taken into consideration, real wages may rise by 1.8 percent this year.”
VÚB Banka senior analyst Martin Lenko estimates that the annual rate of inflation in July would remain around 1 percent.
“On a month-on-month comparison, consumer prices [in July] should decrease by 0.1 percent under the influence of the seasonal decrease in food prices and sales of clothing and footwear during the summer months,” he said.
