INSTANT VIEW 2-Slovak Dec EU-norm CPI in line with fcasts

    Slovak consumer prices rose 
0.1 percent month-on-month in December, according to EU-norm 
data, putting the annual inflation rate at 3.7 percent, data 
from the Statistics Office showed on Wednesday. 
     
SLOVAK EU-NORM INFLATION       DEC 06   DEC 05   DEC forecast 
  pct change mo/mo             +0.1     +0.1      +0.1 
  pct change yr/yr             +3.7     +3.9      +3.7 
   
  (Details of Dec inflation data ............. [ID:nPRG000203]) 
   
NOTE: 
- Food and non-alcoholic beverages, which have a strong 
weighting in the consumer price basket, rise by 0.3 percent 
month-on-month, after a 0.9 percent rise in November. 
- Housing, water, electricity, gas and other fuels, which 
pushed inflation up early last year, rises by 0.1 percent on the 
month in December, after a 1.6 percent jump in November. 
- Annual price growth in the housing category, which has the 
strongest weighting in the consumer basket, is 13.1 percent up 
after 12.7 percent rise in November. 
- Transportation prices falls by 0.5 percent month-on-month, 
after a 0.6 percent drop in November. 
     
    ANALYST COMMENTS: 
    JURAJ VALACHY, ANALYST, TATRA BANKA 
    "Inflation was in line with expectations. There should be a 
minimal impact on the market. There is no reason for the central 
bank to change monetary policy settings now." 
    "January inflation will show how fast the central bank can 
afford to cut interest rates. So far we expect a 50 basis-point 
rate cut at the end of 2007 but if the January figure is good it 
can happen even in the third quarter." 
     
    MICHAL MUSAK, ANALYST, SLOVENSKA SPORITELNA 
    "This figure will have a neutral impact on the monetary 
policy settings." 
    "We expect inflation to fall below 3 percent in January and 
further towards 2 percent later in the year based on the 
positive base effect and the crown strengthening." 
     
    MARKET REACTION: 
-  The crown showed no reaction to inflation data, trading at a 
one-month low of 35.070 per euro as of 0815 GMT , 
weaker from Tuesday's close of 34.970. 
-  The unit has lost 2.9 percent against the euro since hitting 
a record high of 34.050 on Dec. 28. 
     
    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 were flat on the month putting annual rate to 4.2 
percent year-on-year in December. 
 - The central bank expected 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 December. 
     
    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 
     
- For LIVE Slovak economic data releases, click on...... 
- Schedule of upcoming indicator releases............ 
- Summary of short-term economic data forecasts...... 
- Stories on Slovak currency moves........................[SKK/] 
- Slovak speed money guide ................................ 
- Slovak benchmark state bond prices ................. 
- Slovak forward money market rates .................... 
 
 

[BRATISLAVA/Reuters/Finance.cz]