INSTANT VIEW 3-Slovak Jan EU-norm CPI in line with forecasts

    Slovak consumer prices rose 
0.5 percent month-on-month in January, according to EU-norm 
data, putting the annual inflation rate at 2.2 percent, data 
from the Statistics Office showed on Wednesday. 
     
SLOVAK EU-NORM INFLATION       JAN 07   JAN 06   JAN FORECAST 
  pct change mo/mo             +0.5     +1.9      +0.5 
  pct change yr/yr             +2.2     +4.1      +2.1 
   
  (Details of Dec inflation data ............. [ID:nPRG000249]) 
   
ANALYST COMMENT: 
    MARIA VALACHYOVA, SENIOR ANALYST, SLOVENSKA SPORITELNA, 
BRATISLAVA 
    "The figure is rather neutral for monetary policy as it is 
probably in line with central bank's expectations. 
    "It is the beginning of the long-awaited trend, but the 
central bank will wait for longer-term trends of energy prices, 
and for the GDP growth structure. 
    "This does not change our outlook, and we expect the central 
bank to cut interest rates in the second half of the year." 
     
    EDUARD HAGARA, ANALYST, ING BANK, BRATISLAVA 
    "The figure is the start of lower inflation, but it is only 
the first month and there are still risks stemming from prices 
of food and energy prices, which the central bank cannot 
influence. 
    "These are positive figures, if this level is sustained, the 
central bank could move towards lower interest rates." 
     
NOTE: 
- Food and non-alcoholic beverages, which have a strong 
weighting in the consumer price basket, jump 2.2 percent 
month-on-month, after a 0.3 percent rise in December. 
- Housing, water, electricity, gas and other fuels, which 
pushed inflation up last year, fall by 0.2 percent on the month 
in January, after a 0.1 percent rise in December. 
- Annual price growth in the housing category, which has the 
strongest weighting in the consumer basket, is 3.1 percent, 
after 8.9 percent rise in December. 
- Transportation prices fall by 0.3 percent month-on-month, 
after a 0.5 percent drop in December. 
     
    BACKGROUND: 
- The central bank follows inflation calculated by the 
EU methodology as a part of Slovakia's plan to adopt the euro in 
2009. 
- Prices under the local methodology rose 1.0 percent on the 
month, putting the annual rate at 3.0 percent year-on-year in 
January. 
- Slovakia wants to meet all criteria for euro adoption in 2008. 
The central bank predicts EU-norm inflation will fall to 1.5 
percent at the end of 2007. 
- The central bank left the key two-week repo rate unchanged at 
4.75 percent at the monthly February monetary meeting on 
Tuesday. 
     
    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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- Stories on Slovak currency moves........................[SKK/] 
- Slovak speed money guide ................................ 
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- Slovak forward money market rates .................... 
 

[BRATISLAVA/Reuters/Finance.cz]