INSTANT VIEW 2-Slovak Oct EU-norm CPI falls to yr low

   BRATISLAVA, Nov 16 (Reuters) - Slovak consumer prices were 
flat, month-on-month, in October, bringing the EU-norm inflation 
rate to 3.1 percent, data showed on Thursday. 
     
SLOVAK EU-NORM INFLATION       Oct/06       Sept/06      Oct/05 
  pct change mo/mo              0.0           -0.2       +1.3 
  pct change yr/yr             +3.1           +4.5       +3.5 
   
- Analysts surveyed by Reuters had expected EU-norm 
inflation to have risen by 0.1 percent month-on-month, and 3.3 
percent year-on-year in October. 
- Food and non-alcoholic beverages, which have a strong 
weighting in the consumer price basket, fell by 0.2 percent 
month-on-month, after a 0.1 percent drop in September. 
- Housing, water, electricity, gas and other fuels, which 
pushed inflation up early this year, rose 0.6 percent on the 
month in October, after a 0.1 percent growth in September. 
- Annual price growth in the housing category, which has the 
strongest weighting in the consumer basket, was 7.8 percent, 
down from 13 percent in September. 
- Transportation prices fell by 1.7 percent month-on-month, 
after a 1.9 percent drop in September. 
 
COMMENTARY 
    MICHAL MUSAK, ANALYST, SLOVENSKA SPORITELNA, BRATISLAVA 
    "The main factor was the base effect, when the impact of 
last year's rise in energy prices disappeared. The number was 
slightly better than expected. 
    "This does not change our expectation of a 25 basis point 
rate hike by the end of this year." 
 
MARKET REACTION: 
 - The crown showed no immediate reaction to the inflation data. 
It traded at 35.725 to the euro shortly after the inflation data 
release. 
 
BACKGROUND: 
 - The central bank follows inflation calculated by the 
EU methodology as a part of Slovakia's plan to adopt the euro in 
2009. 
 - Financial markets follow local-standards inflation more 
closely because it is released earlier and shows only minor 
differences from EU-norm data. Prices under the local 
methodology rose by 0.2  percent on the month and by 3.7 percent 
year-on-year in October. 
 - The central bank expects annual EU-norm inflation at 3.7 
percent in December, above the year-end target of 2.5 percent. 
 - Slovakia wants to meet all criteria for euro adoption in 
2008. The central bank predicts inflation will fall to 2.8 
percent at the end of 2007. 
 - The central bank left the key two-week repo rate unchanged at 
4.75 percent in October, after a 25 basis points hike in 
September. 
 - Analysts say more policy tightening may be needed this year 
to knock inflation down enough to meet euro entry criteria. 
     
    LINKS: 
  - For further details on October inflation and other past 
data, Reuters 3000 Xtra users can click on the Slovak Statistics 
Office's website: 
    http://wwww.statistics.sk/webdata/english/index2_a.htm 
     
- For LIVE Slovak economic data releases, click on......<ECONSK> 
- 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 ................................<SKK> 
- Slovak benchmark state bond prices .................<0#SKBMK=> 
- Slovak forward money market rates ....................<SKKFRA> 
 
 ((Reporting by Martin Santa, Reuters Messaging: 
martin.santa.reuters.com@reuters.net; +421 2 5341 8402)) 
  Keywords: ECONOMY SLOVAKIA INFLATION