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Inflation drops again

AFTER May’s stagnation, inflation continued to fall in June. The official data from the Statistics Office (ŠÚ) showed that in annual terms it dropped by 0.1 percent year-on-year, with the highest decrease seen in food and energy. Observers predict that a drop in prices may also continue in the following months.

AFTER May’s stagnation, inflation continued to fall in June. The official data from the Statistics Office (ŠÚ) showed that in annual terms it dropped by 0.1 percent year-on-year, with the highest decrease seen in food and energy. Observers predict that a drop in prices may also continue in the following months.

Unlike the annual data, the monthly results showed that consumer prices rose by 0.1 percent in June. They increased in clothing and footwear by 0.9 percent; education by 0.6 percent; miscellaneous goods and services by 0.5 percent; transport by 0.2 percent; and health, hotels, cafés and restaurants by 0.1 percent each. Prices dropped in food and non-alcoholic beverages, and recreation and culture by 0.1 percent each, while they remained at the same level as May for alcoholic beverages and tobacco; housing, water, electricity, gas and other fuels; furnishings, household equipment and routine household maintenance; and postal and telecommunication services, the ŠÚ reported.

During the first half of 2014, consumer prices fell by 0.1 percent year-on-year.

The annual drop in prices of electricity came as no surprise as the government decreased electricity prices in January, and gas prices for households also went down slightly, the Sme daily wrote.

Regarding lower food prices, these were affected mostly by oils and fats, which dropped by 1.7 percent together y/y, as reported by Sme.

Andrej Arady, analyst with VÚB Banka, believes that the prices of food may continue to fall. He refers mostly to the expectation that harvests should be higher than last year. Also, economists with the National Bank of Slovakia, country’s central bank, predict that products from flour and meat will decline, Sme wrote.

The drop in food prices, however, does not have to last long.

“We can see in the history that the intervals of drops in prices of food are short and followed by a steep increase,” analyst with Tatra Banka Boris Fojtík told Sme.

Source: Statistics Office website, Sme

Compiled by Radka Minarechová from press reports

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