INSTANT VIEW 2-Slovak April EU-norm CPI above forecasts

...percent, 
data from the Statistics Office showed on Wednesday. 
     
KEY POINTS: 
SLOVAK EU-NORM INFLATION    APRIL 07   MARKET FORECAST 
  pct change mo/mo            0.3         0.1 
  pct change yr/yr            2.0         1.9 
   
  (Details of Feb inflation data ............. [ID:nPRG000350]) 
 
- Food and non-alcoholic beverages, which have a strong 
weighting in the consumer price basket, rise by 1.0 percent 
month-on-month, after a 0.1 percent drop in March. 
- Housing, water, electricity, gas and other fuels prices, which 
pushed inflation up last year, were flat on the month in April, 
compared with a 0.1 percent drop in March. 
- Annual price growth in the housing category, which has the 
strongest weighting in the basket, is 2.6 percent, after 2.6 
percent rise in March. 
- Transportation prices rise by 0.6 percent month-on-month, 
after a 0.3 percent rise in March. 
     
ANALYST COMMENT: 
    LUCIA STEKLACOVA, SENIOR ANALYST, ING BANK, BRATISLAVA 
    "We expect a central bank comment that this number was above 
its exectations. The difference from market forecasts may have 
been caused by prices of drugs, and food prices also rose faster 
than expected. 
    "But demand-led inflation is developing favourably. This was 
a one-off increase, and it should not affect the monetary policy 
settings. We still see room for a 25 basis point interest rate 
cut in the third quarter." 
     
    MARKET REACTION: 
    The Slovak crown showed no reaction to the data, holding 
steady at 33.560 per euro  as of 0715 GMT. 
     
BACKGROUND: 
- The central bank follows inflation calculated by the 
EU methodology as a part of Slovakia's plan to adopt the euro in 
2009. 
- Prices under the local methodology rose by 0.2 percent on the 
month in April, putting the annual rate at 2.7 percent. 
- Slovakia aims to meet all criteria for euro adoption in 2008. 
The central bank predicts EU-norm inflation rate to fall to 1.5 
percent at the end of 2007. 
- The central bank cut its key two-week repo rate by 25 basis 
points to 4.25 percent in April after rising crown tightened 
monetay conditions and helped improve inflation outlook. 
     
LINKS: 
- For further details on April 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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[BRATISLAVA/Reuters/Finance.cz]