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Slovakia’s central bank warns inflation may exceed Maastricht criterion

In coming months Slovakia’s rate of inflation could exceed the European Union’s Maastricht criterion for inflation, Slovakia’s central bank as well as several analysts stated, as reported by the SITA newswire.

In coming months Slovakia’s rate of inflation could exceed the European Union’s Maastricht criterion for inflation, Slovakia’s central bank as well as several analysts stated, as reported by the SITA newswire.

"Taking the ongoing growth of inflation and gradual waning of 2010’s low increase in consumer prices into consideration, the twelve-month average of year-on-year inflation in Slovakia in the second half of 2011 would exceed the [Maastricht] reference values for inflation," stated the National Bank of Slovakia (NBS), as quoted by the SITA newswire.

According to Eva Sadovská, an analyst with Poštová Banka, the twelve-month average of harmonised inflation in Slovakia reached 2.4 percent in June, which is only slightly below the Maastricht limit of 2.6 percent. At the end of the first half of 2011, Slovakia fulfilled that inflation criterion.

"However, in the second half of 2011, we expect the growth of prices of goods and services to speed up. Thus, even the country's twelve-month average will radically increase. Our estimate is 4.1 percent, which would mean that Slovakia will most probably not fulfil the inflation criterion at the end of the year, even assuming that the criterion limit would also increase," Sadovská told SITA.

According to preliminary Eurostat estimates, Slovakia’s general government deficit was 7.9 percent of GDP last year and Slovakia was one of 14 eurozone countries that failed to fulfil that fiscal criterion under the Maastricht treaty. Slovakia does meet the criteria for public debt as a percent of GDP as it was 41 percent in 2010, less than the reference value of 60 percent.

Source: SITA

Compiled by Zuzana Vilikovská from press reports
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