INSTANT VIEW 2-Slovak Oct PPI touch above fcasts

    Nov 28 (Reuters) - Slovak producer prices rose 0.1 percent 
month-on-month in October, putting the annual inflation rate for 
factory-gate costs (PPI) at 7.1 percent, data showed on Tuesday. 
 
PRODUCER PRICES              OCT 06     SEPT 06      OCT 05 
 pct change month/month       +0.1       -0.7         +0.5 
 pct change year/year         +7.1       +7.5         +5.7 
     
- Analysts polled by Reuters had forecast producer prices to be 
flat on a monthly basis in October, and predicted the annual 
rate at 6.9 percent <SK/ECON04> <SK/ECON09>. 
- Of the three PPI categories, prices of industrial products 
fell by 0.4 percent on the month, after a 0.7 percent drop in 
September. 
- Prices of electricity, gas, steam and hot water rose by 0.8 
percent, month-on-month, after a 0.8 percent drop in September. 
- Prices of raw materials were flat, compared with a 1.0 
percent monthly drop in the previous month. 
- Within industrial products, refinery goods were down 6.7 
percent month-on-month, after a 7.1 percent drop in September. 
     
ANALYST COMMENTS: 
    MARIA VALACHYOVA, ANALYST, SLOVENSKA SPORITELNA, BRATISLAVA 
    "The data are in line with our expectations. The main factor 
causing the slowdown in the annual rate were prices of fuels, 
which was also in line with expectations." 
     
    FRANCESCA BEAUSANG-HUNTER, ANALYST, 4CAST, LONDON 
    "The result is not massively above expectations and confirms 
a continued moderation in PPI from a May high of 9.9 percent 
year-on-year. The result is unlikely to have a major impact on 
today's central bank decision." 
    
MARKET REACTION: 
 - The Slovak crown was unchanged after tha data release, 
trading at 35.640 to the euro as of 0810 GMT. 
     
 BACKGROUND: 
- Slovak producer prices have 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 has reiterated a cautious stance after the 
September rate increase and has said more policy tightening may 
be needed in the future if upward pressures on prices persists. 
- Analysts expected the central bank to keep the key two-week 
repo rate unchanged at 4.75 percent at the monthly policy 
meeting later on Tuesday, but they predicted another rate 
increase by at least 25 basis points in the coming months. 
- Slovakia needs to curb consumer price inflation by spring 2008 
to fulfil its goal of adopting the euro in 2009. 
   
LINKS: 
- For further details on October 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 and Peter Laca, editing by 
bratislava.newsroom@reuters.com; Reuters Messaging: 
martin.santa.reuters.com@reuters.net; +421 2 5341 8402)) 
  Keywords: SLOVAKIA PPI/