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Inflation approaches record lows, fall to continue

The trend of a gradual annual fall in the prices of goods and services is expected to continue in the months ahead, as the rate is predicted to attack the lowest rates since 2009 and 2010, according to analysts.

The trend of a gradual annual fall in the prices of goods and services is expected to continue in the months ahead, as the rate is predicted to attack the lowest rates since 2009 and 2010, according to analysts.

“The slowdown in the increase in prices of foodstuffs and alcohol-free beverages is definitely good news for Slovaks ahead of Christmas,” Poštová Banka analyst Eva Sadovská told the TASR newswire. “They set us back only 1.1 percent more than last year, and we expect a similar development in the prices in December too.”

“Some sectors saw deflation, that is an overall drop in prices,” said Home Credit Slovakia analyst Michal Kozub. “This particularly concerns transport, which involved a drop in fuel prices as well as in the prices of new cars.”

The latest developments in Slovakia have been somewhat of an antithesis to a mild acceleration in inflation seen in the eurozone as a whole last month. “Having said that, inflation is likely to be lower in the next few quarters than what we've seen over the past few years,” said Slovenská Sporiteľňa bank analyst Martin Baláž.

Boris Fojtík of Tatra Banka also expects the favourable trend to persist into 2014. The heralded 7-percent drop in electricity prices as well as pricing developments in other sources of energy may push inflation even closer to zero. Meanwhile, Sadovská expressed her estimate for the overall inflation in 2014 at 1.6 percent.

“This will continue to be a comparatively slow pace in price increases, just like in 2013. Thanks to this, we should see a rise in real salaries next year,” she said.

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