Core inflation at 1.6 percent, net inflation at 0.9 percent in July

Inflation reached 1.5 percent year-on-year in July, with core inflation standing at 1.6 percent and net inflation at 0.9 percent, the Slovak Statistics Office (ŠÚ) announced on Monday, August 12.

Inflation reached 1.5 percent year-on-year in July, with core inflation standing at 1.6 percent and net inflation at 0.9 percent, the Slovak Statistics Office (ŠÚ) announced on Monday, August 12.

Overall inflation in July was negatively influenced by core inflation by 0.06 percentage points month-on-month. Meanwhile, regulated prices and indirect taxes had no impact on the overall figure. Food prices had a negative effect on core inflation of 0.09 percentage points, while net inflation negatively affected core inflation by 0.03 percentage points, the TASR newswire quoted the ŠÚ.

Inflation, which stood at 1.5 percent year-on-year in July, fell 0.1 percent month-on-month mainly thanks to certain seasonal decreases in food and clothing prices, UniCredit Bank Slovakia chief economist Ľubomír Koršňák told TASR. Conversely, the figure was pushed up by mounting fuel prices, reflecting seasonal developments in oil prices on the global market, he added.

“The current developments with respect to inflation are mainly driven by food prices,” he continued. “Year-on-year growth in these should begin to slow down from the viewpoint of statistics due to the higher reference basis recorded last year. On top of that, prices of agricultural commodities in Slovakia have started to fall slightly over the past few months, which could then be projected with a small delay into end prices of food in the form of decelerated growth,” said the analyst. He went on to say that taking into account the poor level of domestic demand, year-on-year inflation figures should hover around 1.5 percent over the next few months.

Nonetheless, recent developments in consumer prices in Slovakia are very similar with respect to the average figures for central and eastern Europe as well as the entire European Union. “The only extreme case in the neighbouring area is Poland, with growth in consumer prices close to zero,” Tatra Banka economic analyst Boris Fojtík told TASR.

Overall inflation in July was slightly lower than earlier estimates of the Slovak central bank (NBS), NBS currency department analysts said in response to the July inflation statistics, which helped lead NBS to revise its estimates. Prices of unprocessed foods, marketable goods and regulated prices grew slower than the figures estimated by NBS. On the other hand, prices of processed foods grew at a faster rate than expected, with the net inflation recording a slight drop.

“We expect it to stay close to 1 percent in the upcoming months and then, as of the beginning of 2014, start to slightly increase,” said the NBS analysts. “Based on current inflation developments, we expect inflation to show no more than only a slight slowdown under 1.5 percent now, with the lowest values expected in October and November (before the trend is reversed)," added the analysts.

(Source: TASR)
Compiled by Zuzana Vilikovská from press reports
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