INSTANT VIEW 2-Slovak July CPI slightly below forecasts

...Friday. 
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KEY POINTS: 
SLOVAK HEADLINE CPI     JULY 07    JULY 07 FCASTS 
  pct change mo/mo       +0.0          +0.1 
  pct change yr/yr       +2.3          +2.4 
     
(for full table pls click ............ [ID:nPRG000451]) 
     
- July core inflation rate, which excludes the impact of changes 
to state-regulated prices and excise taxes, is -0.1 percent 
month-on-month, compared with the forecast of a 0.1 percent 
rise. 
- Housing, water, electricity, gas and other fuels are flat on 
the month, after a 0.7 percent growth in June. 
- Prices of food and non-alcoholic beverages is up by 0.1 
percent on the month in July, matching the rise from June. 
- Transportation prices, influenced mainly by oil costs, rise by 
0.2 percent on the month in July, after 0.4 percent growth in 
June. 
 
COMMENTARY: 
    EDUARD HAGARA, ANALYST, ING, BRATISLAVA 
    "CPI was better than expected, mainly due to a monthly 
decrease in food prices. The inflation structure brought no 
surprises, and it is not showing demand-led pressures. 
    "The data should not have an impact on the monetary policy 
scenario of flat interest rates by the end of this year. We 
expect a 25 basis point hike in the first quarter of next year." 
     
MARKET REACTION: 
-The crown weakens to a two-week low 33.570 per euro from 33.550 
before the data, with traders saying the driver was negative 
global sentiment on emerging markets and worse-than-expected 
foreign trade data for June. The unit closed at 33.495 on 
Thursday. 
     
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 
July on Aug 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, partly due 
to the government pressure on utilities. 
- The central bank (NBS) held interest rates steady in July. It 
last cut the key two-week repo rate by 25 basis points to 4.25 
percent in April after a stronger crown helped improve the 
inflation outlook. 
     
LINKS: 
- For further details on July 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 
 
- For LIVE Slovak economic data releases, click on...... 
- Schedule of upcoming indicator releases............ 
- Summary of short-term economic data forecasts...... 
- Stories on Slovak currency moves........................[SKK/] 
- Slovak speed money guide .............................. 
- Slovak benchmark state bond prices ................. 
- Slovak forward money market rates .................... 
 

[BRATISLAVA/Reuters/Finance.cz]