Slovak April inflation above forecast,still benign

...still matched record lows 
and confirmed expectations of lower interest rates. 
    Consumer prices rose 0.3 percent on the month, according to 
EU-norm methodology, the Slovak Statistics Office said on 
Wednesday. The annual inflation rate was 2.0 percent, the same 
as the all-time low recorded in February. 
    April's figures were above market forecasts of 0.1 percent 
monthly and 1.9 percent yearly inflation. Annual inflation was 
2.1 percent in March. 
    "The difference from market forecasts may have been caused 
by prices of drugs, and food prices also rose faster than 
expected," said Lucia Steklacova, a senior analyst at ING Bank 
Bratislava. 
    Food and non-alcoholic beverages, which have a heavy 
weighting in the consumer price basket, rose 1.0 percent 
month-on-month, after a 0.1 percent drop in March. 
    EU-norm inflation will be the price growth yardstick for 
assessing Slovakia's readiness to enter the euro zone, which the 
country aims to achieve in 2009. 
    The central bank and analysts expect Slovakia to meet the 
inflation criterion for euro adoption, under which annual price 
growth must not be higher than 1.5 percentage points above the 
average of the three lowest inflation rates in the EU. 
    "There is no threat of failing to meet the Maastricht 
criterion," said Tatra Banka analyst Juraj Valachy. 
    Market watchers, including Valachy and ING's Steklacova, 
said there were no dangerous trends in demand-led inflation, and 
they saw room for more monetary policy easing in the third 
quarter of this year. 
    The central bank cut the key two-week repo rate by 25 basis 
points in March and April to 4.25 percent, after a rising crown 
tightened monetary conditions and helped to improve the 
inflation outlook.  
    The monetary authority has also revised downwards its 
end-2007 inflation forecast to 1.3 percent from 1.5 percent. 
  
  Keywords: SLOVAKIA ECONOMY/INFLATION 
    

[BRATISLAVA/Reuters/Finance.cz]