UPDATE 1-Slovakia meets euro inflation test for first time

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By Martin Dokoupil

BRATISLAVA, Sept 14 (Reuters) - Slovakia met the inflation criterion for entry to the euro zone for the first time in August, data showed on Friday, and analysts said price growth should slow further below the threshold in the coming months.

Slovak prices fell by 0.1 percent on a monthly basis, and EU-harmonised inflation remained at a record low of 1.2 percent on the year, helped by food and shoe prices, the Statistics Office said.

"Slovakia met the Maastricht criterion for the first time as the 12-month average is 2.37 percent for Slovakia while the threshold is 2.56 percent," said Eduard Hagara, analyst at ING Bank in Bratislava.

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 the lowest inflation.

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

Both the central bank and analysts expect Slovakia to meet its euro test with a comfortable margin next spring.

"We expect the Slovak average to fall further to 1.6 percent in December, where it could stay until March or April," Hagara said. "So the criterion should be met with a big margin as it is unlikely that it should drop bellow 2.5 percent."

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 as they expect 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)