(Writes through with central bank, analyst comments)
By Martin Santa
BRATISLAVA, Oct 16 (Reuters) - Rising food prices lifted Slovak EU-norm inflation from record lows in September, but analysts said interest rates would stay on hold as the country appeared on track to meet a key euro entry test.
Inflation quickened to 1.7 percent on an annual basis in September, from a historical minimum of 1.2 percent booked in both August and July, the Statistics Office said.
On the month, consumer prices rose 0.3 percent in September after a 0.1 percent fall in August. The market had expected inflation of 0.1 percent on the month and 1.6 percent on the year.
The central bank (NBS) said the data came in above its expectations, adding inflation could pick up further in October.
"The year-on-year inflation dynamics could accelerate slightly in October compared with September, mainly due to an expected acceleration of the price dynamics in services and foodstuffs, as well as an annual rise in prices of fuels," the NBS said.
Food prices, which have a strong weighting in the price basket, jumped 0.8 percent on the month in September, compared with a 1.0 percent drop in August.
The crown showed scant reaction to the data, trading at 33.705 per euro <EURSKK=> by 1405 GMT, about a quarter percent weaker on the session after a bout of selling late on Monday.
EU-norm inflation is the key gauge for the central bank (NBS), which aims to bring Slovakia into the euro zone in 2009.
Based on September's data, the euro entry test -- calculated as an average of the European Union's three countries with the lowest 12-month average inflation rates [] plus 1.5 percentage point -- was 2.57 percent.
Slovak inflation averaged 2.1 percent.
Consumer inflation, calculated by local standards, rebounded from a two-year low to 2.8 percent in September, data showed last week.
INFLATION SEEN IN CHECK
Slovakia met the inflation criterion for the first time ever in August despite its red-hot economy, which expanded by 9.4 percent in the second quarter.
Both the NBS and analysts expect the country to keep inflation under the euro adoption threshold by a comfortable margin in the coming months. The NBS holds a regular monthly policy meeting on Oct. 30.
The bank kept the key two-week repo rate at 4.25 percent for the fifth month running in September, waiting to see whether the euro zone benchmark, now at 4.0 percent, will rise further.
"It is probable that the differential against the ECB (European Central Bank) will remain," said Jaromir Sindel, chief economist at Citibank in Prague.
"This should support the Slovak crown and tame inflationary pressures, which will help keep inflation growth in line with the Maastricht requirements," he said.
(For details on September inflation please click on [])
((Writing by Martin Dokoupil/Martin Santa; editing by David Christian-Edwards; Reuters Messaging: martin.santa.reuters.com@reuters.net; +421 2 5341 8402))
Keywords: SLOVAKIA INFLATION/
