INSTANT VIEW 2-Slovak March CPI slightly below forecasts

...Slovak Statistics Office said on Thursday. 
 
KEY POINTS: 
SLOVAK HEADLINE CPI      MARCH 07    MARCH 07 FCASTS 
  pct change mo/mo         0.0         +0.2 
  pct change yr/yr        +2.7         +2.8 
     
(for full table pls click ............ [ID:nPRG000306]) 
     
- Analysts surveyed by Reuters had expected consumer prices to 
have risen by 0.2 percent on the month, for an annual rate of 
2.8 percent in March. 
- The core inflation rate, which excludes the impact of changes 
to state-regulated prices and excise taxes, was forecast at 0.2 
percent month-on-month and at 2.7 percent on an annual basis. 
- Housing, water, electricity, gas and other fuels are flat in 
March, after 0.8 percent growth in the previous month. 
- Prices of food and non-alcoholic beverages are flat on the 
month in March after a 0.3 percent rise in February. 
- Transportation prices, influenced mainly by oil costs, rise by 
0.1 percent on the month in March, after a 0.7 percent drop in 
February. 
 
ANALYST COMMENT: 
    MARIA VALACHYOVA, SENIOR ANALYST, SLOVENSKA SPORITELNA, 
BRATISLAVA 
    "The data confirm the picture of a favourable inflation 
outlook. They also confirm that demand-led inflation pressures 
are not very strong, and the central bank will be able to react 
to strong crown by lowering interest rates. We expect a rate 
cut, by 25 basis points, in April." 
     
MARKET REACTION: 
    The crown showed no reaction to inflation data, trading flat 
at 33.380 to the euro  
    
BACKGROUND: 
- Inflation data were calculated according to domestic 
methodology. 
- The central bank sets its goals according to inflation 
calculated under the EU-harmonised consumer price index as part 
of Slovakia's goal to adopt the euro in 2009. 
- The Statistics Office will release EU-norm inflation data for 
March on April 16. 
- The market followed local inflation data in the past because 
of their earlier release, but analysts started to pay more 
attention to statistics by EU-methodology after the two figures 
began to show wider differences earlier in 2007. 
- Slovak inflation accelerated in 2005 and 2006 due to hikes in 
natural gas and heating prices for households. 
- But price growth slowed down at the start of 2007 as the 
effect of energy price hikes faded away. 
- The central bank cut its key two-week repo rate by 25 basis 
points to 4.50 percent in March after rising crown tightened 
monetay conditions and helped improve inflation outlook. 
     
LINKS: 
- For further details on March inflation and other past data, 
Reuters 3000 Xtra users can click on the Slovak Statistics 
Office's website: 
    http://wwww.statistics.sk/webdata/english/index2_a.htm 
 
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