INSTANT VIEW 3-Slovak Dec CPI slightly below fcasts

    BRATISLAVA, Jan 12 (Reuters)  - Slovak consumer prices were 
flat month-on-month in December, putting the annual inflation 
rate at 4.2 percent, the Statistics Office said on Friday. 
     
KEY POINTS: 
SLOVAK HEADLINE CPI      DEC 06    NOV 06     DEC forecast 
  pct change mo/mo         0.0      +0.6       +0.1 
  pct change yr/yr        +4.2      +4.3       +4.3 
 
(Details of Dec inflation data ............... [ID:nPRG000198]) 
     
     
- Analysts surveyed by Reuters had expected consumer prices to 
have risen by 0.1 percent on the month, for an annual rate of 
4.3 percent in December. 
- The core inflation rate, which excludes the impact of changes 
to state-regulated prices and excise taxes, was forecast at 0.1 
percent month-on-month and at 2.9 percent on an annual basis. 
- Prices of food and non-alcoholic beverages rise by 0.2 percent 
on the month in December, down from 0.7 percent in November. 
- Housing, water, electricity, gas and other fuels, which have 
the strongest weighting in the consumer basket, are flat in 
December, after a 1.6 percent rise in the previous month. 
- Transportation prices, influenced mainly by oil costs, fall by 
0.5 percent on the month in December, after a 0.7 percent drop 
in November. 
 
COMMENTARY: 
    JURAJ VALACHY, ANALYST, TATRA BANKA, BRATISLAVA 
    "CPI was in line with predictions. Overall, the data can be 
seen as positive. They should not spark any reaction in monetary 
policy settings, or on the market. Annual inflation should fall 
significantly in January." 
     
    SILVIA CECHOVICOVA, ANALYST, CSOB BANK, BRATISLAVA 
    "Inflation was slightly better than expected, but it is no 
big surprise. I think the data will have a neutral impact on 
monetary policy. Rates will stay unchanged, and the inflation 
outlook is favourable. The annual inflation rate is expected to 
fall to near 3 percent in January because of the base effect." 
 
MARKET REACTION: 
    The crown  showed no immediate reaction to 
inflation data, trading flat at 34.520 to the euro as of 0805 
GMT. 
 
BACKGROUND: 
- Inflation data were calculated according to domestic 
methodology. 
- The central bank more closely follows inflation calculated 
under the EU-harmonised consumer price index, but the market 
pays attention to local data as they signal trends with shop 
prices. 
- The Statistics Office will release EU norm inflation data for 
December on Jan. 17. 
- The central bank sets its inflation targets according to EU 
norm data as part of Slovakia's preparation for joining the euro 
in 2009. 
- Slovak inflation accelerated in 2005 and 2006 due to hikes in 
natural gas and heating prices. 
- The central bank raised the key two-week repo rate by 175 
basis points in 2006 to fend off inflation risks stemming from 
high energy prices and fast economic growth. 
- A Reuters poll earlier this week showed all analysts expecting 
the two-week repo to stay unchanged at 4.75 percent in January. 
   
LINKS: 
- For further details on December 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 
 
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