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Inflation at record low

SLOVAKIA recorded its lowest annual inflation in January since the fall of the communism when the prices of goods stayed at the same level as in January 2013. The core inflation stood at 0.4 percent, while the net inflation at only 0.2 percent, the Statistics Office reported on February 13. In monthly terms the consumer prices rose 0.2 percent.

SLOVAKIA recorded its lowest annual inflation in January since the fall of the communism when the prices of goods stayed at the same level as in January 2013. The core inflation stood at 0.4 percent, while the net inflation at only 0.2 percent, the Statistics Office reported on February 13. In monthly terms the consumer prices rose 0.2 percent.

Analysts said the inflation was mostly affected by regulated energy charges for households, particularly electricity charges that fell year-on-year by 6.1 percent, the TASR newswire wrote.

Compared with January 2013, the prices grew in education (by 5.4 percent), alcoholic beverages and tobacco (by 2.5 percent), hotels, cafés and restaurants (by 1.5 percent), health (by 1 percent), food and non-alcoholic beverages (by 0.9 percent), and clothing and footwear and recreation and culture (both by 0.7 percent). On the other hand, they fell in postal and telecommunication services (by 1.4 percent), furnishings, household equipment and routine household maintenance and transport (by 1.3 percent), miscellaneous goods and services (by 1 percent), and housing, water, electricity, gas and other fuels (by 0.9 percent).

On a monthly basis, notable increases were observed in food and non-alcoholic beverages (by 2.8 percent) and in alcoholic beverages and tobacco (by 0.7 percent). Significant month-on-month drops were recorded in clothing and footwear (by 1.9 percent), in accommodation, water, electricity, gas and other fuels (by 0.8 percent), and in furniture, household equipment and ordinary household maintenance (by 0.3 percent). Prices in postal services and telecommunications and in education did not change.

The index of consumer prices in households of employees did not change in annual terms, while in households of pensioners it increased by 0.1 percent. Compared with December 2013 the January index of consumer prices in households of employees rose by 0.2 percent and in households of pensioners by 0.3 percent, the Statistics Office reported.

Ľubomír Koršňák, analyst with the UniCredit Bank Czech Republic and Slovakia, thinks that the slow-down of demand inflation could be partially attributed also to post-Christmas discounts.

“A good example can be the footwear and clothing category, where prices dropped month-on-month by 1.9 percent in January, which amounts to most significant January decrease in prices at least since 2002,” Koršňák said, as quoted by the TASR newswire.

He expects that the inflation will stay low even in the following months, with a slight acceleration estimated no sooner than in the second half of 2014.

“The risk of deflation is still here, although we expect that prices should maintain their slight year-on-year growth and that the year-on-year inflation already reached its bottom in January,” Koršňák said.

Source: Statistics Office, TASR

Compiled by Radka Minarechová from press reports

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