Slovak c.bank, govt at odds over price regulation

                                
 By Peter Laca
                                
 BRATISLAVA, Aug 4 (Reuters) - The Slovak central bank called
on the government to abandon a bill that would allow ministries
to regulate retail cost of goods and services with the aim of
preventing price jumps after the adoption of the euro in 2009.
                                
 A document posted on the government's web page
(www.government.sk) showed on Monday the National Bank of
Slovakia (NBS) told the finance ministry it should withdraw the
draft law because "euro adoption is not an event requiring
official price regulation".
                                
 Facing public fears that inflation will jump after Slovakia
becomes the 16th member of the euro zone in 2009, the government
of leftist Prime Minister Robert Fico has intensified efforts to
keep prices in check after euro entry.
                                
 The cabinet said regulation was a last resort measure,
adding that the main focus would be on price monitoring and
public disclosure of retailers abusing the switchover by hikes.
                                
 The finance ministry has put forward a bill setting
conditions under which ministries can control shop prices if
they deem their rise as speculative and unjustified.
                                
 In its observations, voiced during a formal procedure of
comments and recommendations, the NBS said the draft "could not
be considered as necessary" and should be withdrawn.
                                
 "In a market economy, the price is formed by supply and
demand... we do not expect that supply or demand for goods and
services should change in any way after January 1, 2009, and
cause a significant increase in prices," the NBS said.
                                
 The government approved the price regulation plan in
principle in July and the finance and justice ministries are
preparing laws for its implementation.
                                
 The plan has drawn sharp criticism from retailers, who said
the local market was mature enough and that competition would
prevent unusual price moves.
                                
 The finance ministry rebuffed criticism by the central bank,
saying the bank did not object to the broad plan that had laid
the basis for the draft law.
                                
 "The National Bank did not comment, nor did it in any way
protest against these principles then," Deputy Finance Minister
Peter Kazimir said through a spokesman.
                                
 The finance ministry expects the government to debate the
draft law after the end of its summer break later in August.
                                
 Surveys have showed that consumers in some euro zone
countries, such as France and Italy, felt that the rollout of
euro notes and coins in 2002 boosted inflation by far more than
official data suggested at the time.
                                
 Slovakia has already seen accelerating inflation in the past
year because of more expensive food and energy. Global price
trends are a risk for inflation in the future, and analysts said
the cabinet wants to avoid perceived association of higher
retail prices with euro adoption.
 (Editing by Swaha Pattanaik)