LOWER vegetable prices and other seasonal influences slowed the growth of consumer prices in Slovakia, which increased at a lower rate in June than in the previous month, the first time this year that had happened. The year-on-year inflation rate dropped marginally to 3.9 percent in June from May’s 4-percent rate. Consumer prices over the first six months of 2011 have increased on average by 3.6 percent, the country’s statistics authority reported.
Though the drop brought a pleasant surprise to market watchers, they quickly added that the slight slowdown in the rate of increase in prices in June does not mean that inflation has peaked for the year.
“The slowdown in the year-on-year of growth of food prices, particularly vegetables, has made a major contribution to the deceleration of the dynamics of annual inflation,” said Ľubomír Koršňák, an analyst with UniCredit Bank. He added that year-on-year inflation for services and marketable goods moderately sped up again, despite weak domestic demand.
Koršňák noted that food prices dropped in June by 0.5 percent month-on-month and their year-on-year growth slowed from 7.4 percent in May to 7.1 percent in June 2011.
“Thus, the culmination of year-on-year growth of food prices could have already occurred in May,” Koršňák added.
Koršňák said the drop in food prices in June was impacted mainly by a significant drop in fresh vegetable prices of 10.7 percent month-on-month.
“A massive seasonal drop of vegetable prices usually comes a month later in July,” Koršňák noted, adding that vegetable prices alone reduced the overall month-on-month inflation rate by about 0.2 percentage points. “However, it cannot be excluded that the significant drop in vegetable prices is only an earlier seasonal drop and will gradually be compensated by a slower drop of prices during the upcoming two months.”
The most significant price increases on an annual basis were recorded for prepared foodstuffs and non-alcoholic beverages (7.1 percent), in transport (6.3 percent), in education (4.8 percent), in housing, water, electricity, gas and other fuels (4.4 percent), and in alcohol and tobacco products (4.2 percent), according to the Statistics Office. Prices also were higher year-on-year for miscellaneous goods and services (3.8 percent), for health care (3.3 percent), for clothing and footwear (2.7 percent), and in hotels and restaurants (2.2 percent).
Slovakia registered a historically-low inflation rate of just 1 percent in 2010 due to a major drop in domestic demand during the economic crisis, the SITA newswire reported. Most bank analysts are predicting that Slovakia’s inflation rate in December this year will be about 4.5 percent.
18. Jul 2011 at 0:00 | Beata Balogova with press reports