Slovak CPI slows in November, rates seen on hold

...price increases last year offset a 
continued rise in food costs, data showed on Tuesday. 
    Annual inflation slipped to 3.1 percent in November from 3.3 
percent in October. Consumer prices were up 0.5 percent 
month-on-month, slightly below a 0.6 percent rise the previous 
month, the Statistics Office said. 
    November inflation was a touch above market forecasts, which 
were for a 0.3 percent monthly and 3.0 percent annual rate. 
    "It is slightly higher than we expected. Food prices showed 
the highest increase again in November, like in the previous 
month," said Silvia Cechovicova, analyst with CSOB Bank. 
    Prices of food and non-alcoholic beverages rose 1.2 percent 
on the month in November, slowing from a 2.6 percent increase in 
October. 
    November inflation was influenced by base effects as last 
year's increase in natural gas costs vanished from the annual 
comparison. 
    Tuesday's inflation data were calculated according to 
domestic methodology. The central bank (NBS) sets its goals 
according to 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 
November on Dec. 14. 
    Analysts said the inflation data should not provoke any rate 
move by the central bank, but they pointed to rising prices of 
services as a possible source of increasing demand pressures in 
the fast growing Slovak economy. 
    "Accelerating prices of market services could indicate signs 
of building inflationary pressures, and therefore we think the 
central bank should remain cautious," said Eduard Hagara, an ING 
Bank analyst in Bratislava. 
    The central bank has left the main two-week repo rate at 
4.25 percent for seven months in a row after two 25 basis point 
cuts in March and April. 
    Inflation is seen as the main challenge for Slovakia's goal 
of adopting the euro in 2009, but analysts said the country 
should meet the price growth condition for euro zone entry 
despite the recent inflation spike. 
    "There is no significant risk to the euro adoption process 
since inflation in Slovakia is driven by the same factors as in 
the EU and euro zone -- food and oil prices," said Piotr Matys 
analyst with 4Cast in London. 
    (Writing by by Peter Laca; editing by David Stamp) 
     
    (for full table please click ............ [ID:nBSD000011]) 
  Keywords: SLOVAKIA ECONOMY/INFLATION 
    

[BRATISLAVA/Reuters/Finance.cz]