INSTANT VIEW 2-Slovak Jan PPI above forecasts

...factory-gate costs (PPI) at 3.8 percent, the 
Slovak Statistics Office said on Wednesday. 
 
 KEY POINTS: 
 PRODUCER PRICES              FEB 07   FEB FORECASTS 
 pct change month/month       +1.8       +0.2 
 pct change year/year         +3.8       +2.2 
 
(Full table of Feb inflation data ............. [ID:nPRG000286]) 
 
 - Of the three PPI categories, prices of industrial products 
fall by 0.1 percent on the month, after a 0.6 percent drop in 
January. 
 - Prices of electricity, gas, steam and hot water jump by 4.4 
percent month-on-month after a 0.3 percent drop in January. 
 - Prices of raw materials rise 0.9 percent in February after a 
2.2 percent fall in the previous month. 
 - Within industrial products, refinery goods fall by 11.8 
percent month-on-month after an 8.0 percent drop in January. 
  
    EDUARD HAGARA, ANALYST, ING BANK BRATISLAVA 
    "Energy prices were the main factor behind the rise. It was 
the only surprising item, and it is a one-off phenomenon." 
    "There has been low correlation between producer prices and 
consumer price in recent years, and I'm not worried that 
inflation outlook could worsen." 
     
    MARKET REACTION 
    The crown  did not react to PPI data. The local 
unit had eased early in the session to 33.480 per euro, from 
33.400 seen late on Tuesday. 
     
 BACKGROUND: 
 - Slovak producer price inflation slowed down at the beginning 
of 2007 after the impact of last year's jump of energy prices 
faded away. 
 - Slowing PPI has coincided with falling consumer inflation 
rate this year. 
 - Slovakia needs to curb consumer price inflation by spring 
2008 to fulfil its goal of adopting the euro in 2009. 
 - The central bank cut the main two-week interest rate by 25 
basis points on Tuesday, responding to rising crown, healthy 
economic growth and slowing inflation. 
   
 LINKS: 
 - For further details on February producer prices, Reuters 3000 
Xtra users can click on the statistics office's website: 
    http://www.statistics.sk/webdata/english/index2_a.htm 
 
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