INSTANT VIEW 1-Slovak Sept PPI falls despite forecasts

    BRATISLAVA, Oct 27 (Reuters) - Slovak producer prices fell 
0.7 percent month-on-month in September, despite market 
forecasts for a rise, putting the annual inflation rate for 
factory gate costs (PPI) at 7.5 percent, data showed on Friday. 
 
KEY POINTS 
PRODUCER PRICES             SEPT 06      AUG 06      SEPT 05 
 pct change month/month      -0.7         +0.6         +0.5 
 pct change year/year        +7.5         +8.8         +5.8 
- Analysts polled by Reuters had forecast a producer 
price rise of 0.1 percent on a monthly basis in September, and 
8.4 percent on an annual basis <SK/ECON04> <SK/ECON09>.  
- Of the three PPI categories, prices of industrial products 
fell by 0.7 percent on the month, after a 0.3 percent rise in 
August. 
- Prices of electricity, gas, steam and hot water fell by 0.8 
percent, month-on-month, in September, down from a 0.9 percent 
rise in the previous month. 
- Prices of raw materials fell by 1.0 percent, after a 0.1 
percent monthly drop in August. 
- Within industrial products, refinery goods were down 7.1 
percent month-on-month, after a 0.3 percent rise in August. 
 
MARKET REACTION: 
- The Slovak crown showed no immediate reaction to the data. It 
traded at 36.280 per euro on Friday, hovering near its new 
all-time high of 36.250 hit in early trade. It closed at 36.295 
per euro on Thursday. 
     
     
BACKGROUND: 
- Slovak producer prices had shot up this year mainly due to the 
higher cost of oil and natural gas. 
- Accelerating PPI has coincided with increasing risks for 
consumer inflation, which prompted the central bank to raise 
interest rates by 25 basis points in September, a fourth rise in 
2006. 
- The central bank reiterated a hawkish tone after the September 
monetary policy meeting and said more policy tightening was 
likely this year if upward pressures on prices persists. 
- Analysts widely expect the central bank to raise interest 
rates further in 2006 to slash inflation and make Slovakia 
eligible for adopting the euro in 2009. 
- The central bank expects to miss its end-2007 consumer 
inflation target of 2.0 percent, but a slowdown in price growth 
in 2008 will allow Slovakia to meet the euro adoption criteria. 
     
LINKS: 
- For further details on September producer prices, Reuters 3000 
Xtra users can click on the statistics office's website: 
    http://www.statistics.sk/webdata/english/index2_a.htm 
 
- For LIVE Slovak economic data releases, click on......<ECONCZ> 
- Schedule of upcoming indicator releases............<SK/ECON09> 
- Summary of short-term economic data forecasts......<SK/ECON04> 
 
- Stories on Slovak currency moves........................[SKK/] 
- Slovak speed money guide ..............................<CZK/1> 
- Slovak benchmark state bond prices .................<0#SKBMK=> 
- Slovak forward money market rates ....................<SKKFRA> 
 
 ((Reporting by Martin Santa; bratislava.newsroom@reuters.com; 
Reuters Messaging: martin.santa.reuters.com@reuters.net; +421 2 
5341 8402)) 
  Keywords: ECONOMY SLOVAKIA PPI