INSTANT VIEW 2-Slovak EU-norm CPI stays at record low in Aug

...inflation rate at a record low of 1.2 
percent, the Slovak Statistics Office said on Friday. 
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KEY POINTS: 
SLOVAK EU-NORM INFLATION        AUG 07     AUG 07 FORECAST 
  pct change mo/mo                -0.1        -0.1 
  pct change yr/yr                +1.2        +1.2 
 
(Details of August inflation data ............. [ID:nPRG000500]) 
 
- Food and non-alcoholic beverages, which have a strong 
weighting in the consumer price basket, fall by 1.0 percent 
month-on-month, after a 1.3 percent fall in July. 
- Housing, water, electricity, gas and other fuels prices, which 
pushed inflation up last year, rise by 0.1 percent on the month 
in August, after a 0.1 percent increase in July. 
- Annual price growth in the housing category, which has the 
strongest weighting in the basket, was 2.7 percent in August. 
- Transportation prices rise by 0.5 percent month-on-month, 
after 0.2 percent growth in July. 
 
ANALYST COMMENTS: 
    JURAJ VALACHY, ANALYST, TATRA BANKA, BRATISLAVA 
    "Harmonised inflation was in line with the local data. It 
will be key to know whether we already meet the Maastricht 
inflation criterion when Eurostat releases its data later today. 
    "These figures have no implications for monetary policy. I 
expect interest rates unchanged for the rest of this year. 
    "I expect a slight increase in the inflation dynamics in the 
coming months due to food prices and also the base effect, as 
the base was lower last year." 
     
MARKET REACTION:  
- The Slovak crown was at 33.725 per euro  as of 0720 
GMT, compared with 33.680 before the data release. It closed at 
33.680 on Thursday. 
     
  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 0.1 percent on the 
month in August, putting the annual rate at 2.3 percent.  
- Slovakia aims to meet all criteria for euro adoption in 2008. 
The central bank predicts the EU-norm inflation rate to fall to 
1.3 percent at the end of 2007.  
- The central bank cut its key two-week repo rate by 25 basis 
points in March and April, bringing it to the current 4.25 
percent, after the rising crown tightened monetary conditions 
and helped improve the inflation outlook.  
- The bank left the interest rates unchanged in August. 
     
    LINKS:  
- For further details on August 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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