In April, Slovakia saw its highest level of year-on-year inflation since December 2012. Consumer prices increased by 2.9 percent year-on-year and by 0.6 percent month-on-month, the Slovak Statistics Office announced on May 14.
“Despite the first signs of a gradual cooling down posted by household consumption, inflation demand pressure flared up to the full in April,” Ľubomír Koršňák, macroeconomic analyst of UniCredit Bank Czech Republic and Slovakia, wrote in his memo, pointing out that food prices went up by 0.3 percent on a monthly basis, while their y-o-y growth accelerated from 5.7 percent to 5.8 percent.
Meanwhile, Slovenská Sporiteľňa analyst Katarína Muchová pointed to the fact that inflation in April was driven by the growing prices of food, services and transport.
“The price growth in services continues to reflect an improving situation on the labour market, which helps to increase the disposable incomes of households,” said Muchová, as cited by the TASR newswire, adding that the April figures indicate that average inflation for 2018 could end up higher than the figure estimated by the Slovenská Sporiteľna bank at 2.2 percent.
UniCredit expects inflation to culminate in April-June close to 3 percent, driven mainly by growing fuel prices, reacting to more expensive oil and a weaker euro.
“On the other hand, the relatively early beginning of the warm weather, when April was extremely warm, could accelerate a seasonal drop in the prices of some fruit and vegetables,” said Koršňák. “We expect that the traditional May seasonal price increase could be more moderate than usual, while a fall in the prices of seasonal food could be seen as early as June.”
A slowdown in food price growth on a yearly basis could be posted in late 2018, due to the strong base effect of milk and egg prices.
“We still expect that demand inflation will grow faster than overall inflation, being pulled up by strengthening demand pressure in the economy on the back of dynamic salary growth,” said Koršňák.
15. May 2018 at 6:34 | Compiled by Spectator staff