Slovak Sept PPI below forecast on oil prices

    BRATISLAVA, Oct 27 (Reuters) - Slovak producer prices rose 
less than expected in September thanks to cheaper oil, data 
showed on Friday, but analysts still predicted the central bank 
would tighten its monetary policy further later this month. 
    Producer prices fell by 0.7 percent on a monthly basis in 
September, putting the annual inflation rate at 7.5 percent, the 
Slovak Statistics Office said. 
    Analysts polled by Reuters had forecast producer prices to 
have risen by 0.1 percent, month-on-month, for an annual rate of 
8.4 percent. 
    "The category of refinery products, which showed the biggest 
decline, provided the main contribution to the drop," said CSOB 
Bank analyst Silvia Cechovicova. 
    Refinery goods were down 7.1 percent month-on-month, the 
biggest drop in the past 10 months, after a 0.3 percent rise in 
August. 
    "It will take several months to confirm the downward 
direction. I do not see any major implications for the monetary 
policy from this figure, A key reading to watch is the CPI," 
said ING Bank's senior analyst Lucia Steklacova. 
    Slovak factory-gate prices have shot up this year due to 
rising oil costs and subsequent hikes in natural gas prices, but 
producer prices have only a minor impact on consumer price 
inflation which is the central bank's main focus. 
    The lower-than-expected PPI rate followed a slow-down in 
consumer inflation in September, but analysts said the central 
bank would probably raise its interest rates again by 25 basis 
points at the end of October to keep off inflation risks. 
    The central bank has increased the key-two week repo rate by 
175 basis points so far this year to 4.75 percent. It has warned 
more hikes may be needed because of risks stemming from an 
uncertain outlook for utility prices and fast economic growth. 
    "The PPI number obviously is a surprise on the downside, but 
it's quite high and we do not think that this will change much 
for monetary policy," said Danske Bank analyst Lars Christensen. 
 ((Reporting by Martin Santa ; bratislava.newsroom@reuters.com; 
Editing by Gerrard Raven; Reuters Messaging: 
martin.santa.reuters.com@reuters.net; +421 2 5341 8402)) 
  Keywords: ECONOMY SLOVAKIA PPI