* June year-on-year headline inflation unchanged from 4.6
pct May level
* Inflation seen peaking by August
* Slovak rates seen flat after ECB tightening
By Martin Santa
BRATISLAVA, July 10 (Reuters) - Slovakia's annual inflation
rate remained in June at the 4.6 percent level reached in May,
which was a 20-month high, as food and fuel prices continued to
exert pressure.
Analysts said they expected price growth to peak in July or
August.
Consumer prices rose by 0.4 percent month-on-month in June,
the Statistics Office said on Thursday [].
Analysts had expected prices in Slovakia, which will join
the euro zone on January 1. 2009, to rise 0.3 percent on the
month and 4.6 percent on an annual basis in June.
"Food and fuel prices remain inflation's key drivers," said
Maria Valachyova, senior analysts at Slovenska Sporitelna.
Those two factors have spurred inflation across central and
Eastern Europe, although Czech consumer prices grew at only half
the pace predicted by the market -- 0.2 percent month on month
-- in June, lowering chances of a central bank rate hike.
Romanian prices rose 0.3 percent to an annual rate of 8.5
percent.
Slovak food and non-alcoholic beverages rose by 0.7 percent
on the month, a slightly slower pace than May's 1.0 percent.
They were up 9.0 percent on the year.
"The general picture remains unchanged -- inflation is still
driven mainly by cost-push factors," said Piotr Matys, analyst
with 4Cast in London.
Analysts saw no major demand-led inflation risks building up
because the firming crown currency was still tightening monetary
conditions.
"Inflation should, in the nearest months, move closer to 5.0
percent, with a peak coming likely in July-August," said Silvia
Cechovicova, analyst with CSOB Bank. She said risks remained on
the side of food and oil prices.
The crown has gained 11 percent against the euro since
January, boosted by expectations of a strong final conversion
rate, which was set, as widely expected, at its central parity
rate of 30.126 per euro on Tuesday.
The Slovak central bank left its key two-week repo rate flat
at 4.25 percent for the 14th consecutive month in June and
analysts saw rates staying flat this year after the European
Central Bank's hike last week.
The ECB raised interest rates by 25 basis points to 4.25
percent, their highest level in nearly seven years, but dimmed
the prospect of further moves, as euro zone growth looks set to
falter despite soaring inflation.
