INSTANT VIEW 2-Slovak Dec PPI below mkt forecasts

    Slovak producer prices fell 
0.8 percent month-on-month in December, well below market 
expectations, putting the annual inflation rate for factory-gate 
costs (PPI) at 5.4 percent, data showed on Friday. 
 
KEY POINTS: 
PRODUCER PRICES              DEC 06    DEC 05  DEC FCST 
 pct change month/month       -0.8      -0.6    +0.1 
 pct change year/year         +5.4      +7.0    +6.3 
 
(Full table of Dec inflation data ............. [nPRG000210]) 
     
- Of the three PPI categories, prices of industrial products 
fall by 0.3 percent on the month, matching their drop from 
November. 
- Prices of electricity, gas, steam and hot water fall by 1.2 
percent, month-on-month, after a 1.0 percent growth in November. 
- Prices of raw materials fall by 3.2 percent, after a 0.6 
percent rise in the previous month. 
- Within industrial products, refinery goods fall by 0.9 
percent month-on-month, after a 2.7 percent drop in November. 
  
COMMENTARY: 
    MAREK GABRIS, ANALYST, CSOB BANK, BRATISLAVA 
     "The PPI figure was lower because of refinery goods. I 
think this data is not very significant for monetary policy, and 
I don't see any stronger implications from the short-term point 
of view." 
  
MARKET REACTION: 
    The Slovak crown  showed no immediate reaction to 
the data, trading flat at 35.350 to the euro as of 0805 GMT. 
     
BACKGROUND: 
- Slovak producer prices shot up last year mainly due to 
the higher cost of oil and natural gas. 
- Accelerating PPI had coincided with rising consumer inflation, 
which prompted the central bank to raise interest key two-week 
repo rate by 175 basis points in four steps last year to 4.75 
percent in 2006. 
- But the central bank has held rates steady since September 
last year after rising crown helped tame consumer inflation. 
- 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 December 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...... 
- 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]