Inflation dropped, also due to cheaper plane tickets

Observer expects inflation to oscillate around 2.5 percent in the following months.

Food prices had an impact on April inflation.Food prices had an impact on April inflation.(Source: Sme)

After a relatively strong increase in March, the dynamics of price growth in Slovakia dropped in April. Even though prices rose by 0.2 percent month-on-month on average, annual growth dynamics dropped from 2.7 percent to 2.3 percent.

“The slowdown of annual price increase in April was affected by food prices, and particularly demand inflation,” Ľubomír Koršňák, analyst with UniCredit Bank Czech Republic and Slovakia, wrote in a memo.

Read also:Transport and food prices increased March inflation Read more 

The drop in prices was concentrated on two items: cheaper plane tickets and cheaper alcohol.

On the other hand, oil prices impacted the acceleration of the annual growth in fuel prices, he added.

Some questions remain open

Inflation will oscillate around 2.5 percent in the following months, according to Koršňák.

“The question of how quickly retail chains will correct food prices after cancelling the special levy, and how other factors that have been pushing prices upwards will impact this decrease, remains open,” he wrote in a memo.

Read also:Controversial special levy on retail chains scrapped Read more 

The pressure from demand inflation should stabilise and gradually weaken at the turn of the year, mostly due to weakening economic growth. Its full impact is expected in 2020, when inflation should amount to slightly less than 2 percent, Koršňák concluded.

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Theme: Economics

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