(Adds central bank comment in paras 5-6)
By Martin Dokoupil
BRATISLAVA, Nov 15 (Reuters) - Rising food costs pushed Slovak EU-norm inflation to a 10-month high in October, well above market forecasts, but analysts saw no danger that the country will fail the prices test for adopting the euro in 2009.
Inflation quickened to 2.4 percent year-on-year from 1.7 percent the previous month, the Statistics Office said on Thursday. On the month, consumer prices rose 0.7 percent after a 0.3 percent increase in September.
Analysts had originally forecast inflation of 0.2 percent on the month and 1.9 percent on the year but expectations rose after local-norm data on Monday signalled a jump.
The central bank (NBS) said the October rise was also above its expectations, mainly due to the faster rise in food costs, but it saw a slowdown as least year's energy price increases fell out of the comparison.
"Overall inflation dynamic should slow down in November from October, mainly due to the expected slowdown of the year-on-year dynamics of regulated energy prices (base effect)," the central bank said in a statement.
Food prices, which have a strong weighting in the EU-norm price basket, soared 2.9 percent on the month in October, after a 0.8 percent rise in September.
Consumer prices jumped to a 10-month high of 3.3 percent on the year by local standards in October.
The crown eased after Thursday's data, trading at 33.030 per euro <EURSKK=> by 0915 GMT, compared with 32.970 before the release.
INFLATION SEEN BELOW EURO THRESHOLD
EU-norm inflation is the key gauge for the central bank because of the euro zone entry plan.
Slovakia met the euro adoption inflation criterion, defined as 1.5 percentage points above the average of three lowest EU inflation rates, for the first time ever in August despite strong economic growth of 9.4 percent in the third quarter.
Analysts said the NBS would not change its policy settings due to the inflation jump as it was mainly driven by the global rise in food costs rather than consumption.
Both the NBS and analysts expect Slovak inflation to be under the euro adoption threshold by a comfortable margin when the country's readiness for the euro is assessed next spring.
"There should be no risk to meeting the Maastricht criteria despite inflation quickening," said Eduard Hagara, an analyst at ING Bank in Bratislava. "The buffer should be big enough in March and April 2008, when we see Slovak inflation at 1.8 percent and the reference value probably above 2.5 percent."
The NBS kept the key two-week repo rate at 4.25 percent for the sixth month running in October as the strong crown helped to tighten monetary conditions.
The bank also raised its EU-norm inflation forecasts for 2007 and 2008, expecting to exceed its 2.0 percent target next year. The NBS is expected release comments on EU-norm inflation data later on Thursday.
(For details on October inflation please click on [])
(Editing by David Stamp; Additional reporting by Peter Laca)
((martin.dokoupil@reuters.com; +421 2 5341 8402; Reuters Messaging: martin.dokoupil.reuters.com@reuters.net))
Keywords: SLOVAKIA ECONOMY/INFLATION
