INSTANT VIEW 3-Slovak Jan CPI above forecasts

    Slovak consumer prices rose by 
1.0 percent month-on-month in January, putting the annual 
inflation rate at 3.0 percent, the Statistics Office said on 
Friday. 
KEY POINTS: 
SLOVAK HEADLINE CPI      JAN 07    JAN 07 FCASTS 
  pct change mo/mo        +1.0        +0.5 
  pct change yr/yr        +3.0        +2.6 
     
(for full table pls click ............ [ID:nPRG000231]) 
     
- Analysts surveyed by Reuters had expected consumer prices to 
have risen by 0.5 percent on the month, for an annual rate of 
2.6 percent in January. 
- The core inflation rate, which excludes the impact of changes 
to state-regulated prices and excise taxes, was forecast at 0.6 
percent month-on-month and at 2.2 percent on an annual basis. 
- Housing, water, electricity, gas and other fuels, which is the 
item with the the strongest weighting in the consumer basket, 
rises by 1.8 percent in January, after being flat in the 
previous month. 
- Prices of food and non-alcoholic beverages rise by 1.6 percent 
on the month in January, after a 0.2 percent rise in December. 
- Transportation prices, influenced mainly by oil costs, fall by 
0.5 percent on the month in Janaury, after a 0.5 percent drop in 
December. 
 
COMENTARY: 
    JURAJ VALACHY, ANALYST, TATRA BANKA, BRATISLAVA 
    "The CPI number is really high, but it was significantly 
influenced by the maintanence item in rents, which added 0.6 
percentage points to the figure. The HICP (EU-norm inflation) 
does not include that item, which means that HICP data should be 
in line with expectations." 
     
    LUCIA STEKLACOVA, SENIOR ANALYST, ING BANK, BRATISLAVA 
    "The number was quite above expectations. Core inflation was 
surprisingly high. There may have been some secondary effects 
from energy prices that were not captured by the forecasts. 
    "I think these numbers confirm our prediction of stable 
interest rates. There could be room for lower rates in the 
second half of the year." 
 
MARKET REACTION: 
    The crown  firmed slightly after the data, to 
34.560 to the euro, from 34.600 at the open. 
     
BACKGROUND: 
- Inflation data were calculated according to domestic 
methodology. 
- The central bank follows inflation calculated under the 
EU-harmonised consumer price index more closely, but the market 
watches the local figures because of their earlier release. 
- The Statistics Office will release EU norm inflation data for 
January on Feb. 28. 
- 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 for households. 
- The central bank raised the key two-week repo rate by 175 
basis points last year to fend off inflation risks stemming from 
high energy prices and fast economic growth. 
- Analysts said the central bank could cut rates sometime in 
2007 if inflation trend shows that Slovakia is on track to meet 
the consumer price growth condition for euro adoption. 
   
LINKS: 
- For further details on January 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...... 
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- 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]