Slovak CPI at record low, seen meeting euro test

...

BRATISLAVA, Sept 14 (Reuters) - Slovak EU-norm inflation remained at a record low of 1.2 percent on the year in August, data showed on Friday, and analysts said it probably met the key euro adoption criterion for the first time ever.

Consumer prices fell 0.1 percent on a monthly basis, after the same decline in the previous month, the Statistics Office said. The figures were in line with market forecasts.

"Food and shoe prices were the main positive factors behind the monthly decrease," said Maria Valachyova, senior analyst at Slovenska Sporitelna.

"The outlook remains positive and I believe that we should start meeting the Maastricht inflation criterion with this August inflation data," she said.

EU-harmonised inflation is the key gauge for the central bank (NBS), which aims to bring Slovakia into the euro zone in 2009.

The bank expects the central European country to meet its euro test with a comfortable margin next spring.

To enter the euro zone, a candidate country must keep inflation no more than 1.5 percentage point above the average of the three EU states with lowest inflation.

The EU's statistical service Eurostat was due to release the block's inflation data at 0900 GMT. The NBS was expected to comment on August inflation later on Friday.

Analysts said Friday's data did not change the interest rate outlook for the coming months, expecting the NBS to wait for the European Central Bank's (ECB) policy adjustments before making a move.

"These figures have no implications for monetary policy. I expect interest rates unchanged for the rest of this year," said Juraj Valachy, analyst at Tatra Banka in Bratislava.

The NBS kept the key two-week repo rate at 4.25 percent for the fourth month in a row in August, which is a 25 basis point premium over the euro zone benchmark. (For details on August inflation pls click on [ID:nL1484940]

(Additional reporting by Martin Santa)

Keywords: SLOVAKIA INFLATION/