INSTANT VIEW 2-Slovak Dec inflation in line with forecasts

                                
 BRATISLAVA, Jan 14 (Reuters) - Slovakia's consumer prices,
calculated under the EU methodology, rose as expected by 0.2
percent on the month in December, putting the annual inflation
rate at 1.3 percent, the Statistics Office data showed on
Friday.
                                
 Analysts in a Reuters poll had forecast prices to rise by
0.2 percent on the month and by 1.3 percent on the year.
                                
 Inflation increased -- month-on-month -- mainly due to a 0.8
percent rise in prices of food and non-alcoholic beverages,
which traditionally have a strong weight in the overall
inflation basket.
                                
 Transportation prices were the second key driver with a 1.1
percent rise on the month in December.
                                
 Analysts expect inflation in the euro zone member to speed
up gradually this year, as demand-led price pressures remain
weak, with the jobless rate off but still in sight of five-year
high seen in February last year.
                                
 Inflation, however, is expected to jump this year -- to
among one of the European Union's highest -- on higher commodity
and utility prices, hike in Slovakia's value added and excise
taxes.
                                
 The euro zone poorest economy's unemployment rate stood at
12.22 percent in November -- one of the European Union's highest
-- which keeps domestic demand at bay and analysts expected only
a slow and gradual recovery of household consumption next year.
                                
 
===============================================================
SLOVAK EU-NORM INFLATION   DEC 10        DEC 10 FCAST
  pct change mo/mo          0.2             0.2
  pct change yr/yr          1.3             1.3
  (Full December data table  .............. [ID:nBSD002394])
SLOVAK HEADLINE INFLATION
                                
                         DEC 10    DEC 10 FCAST 
  pct change mo/mo           0.3          0.2
  pct change yr/yr           1.3          1.3
                                
(Full December data table .............. [ID:nBSD002395])
===============================================================
                                

                                
 ANALYST COMMENT
                                
 EDURAD HAGARA, SENIOR ANALYST, ING BANK
                                
 "In 2010, Slovakia's rise in consumer prices was smaller
than that of the euro zone for the first time ever, but we
cannot expect to see this again in the near future."
                                
 "We expect inflation to accelerate to almost 4 percent this
year. The labour market's recovery is slow, and (demand-led)
inflation pressures should be only minor. Inflation will,
however, be driven by cost factors."
                                
 "A worse-than-expected crop is reflected in higher food
prices, and energy prices are rising alongside higher prices of
oil."
                                
 
                                
DETAILS
- For month-on-month inflation, prices of food and non-alcoholic
beverages increase by 0.8 percent in December, after a 1.3
percent rise in the previous month.
- Transportation prices jump by 1.1 percent in December, showing
its strongest rise this year, following a 0.2 percent increase
in the previous month and a 0.1 percent drop in October.
- Prices of alcoholic beverages fall by 0.3 percentm after being
flat for tree months in a row.
- Housing, water, electricity, gas and other utility prices are
up by 0.1 percent for a second month in a row.
- Recreation and culture-related prices edge up by 0.2 percent
in December, after being flat in November.
                                
 
                                
 BACKGROUND
- Slovakia, a euro zone member since January 2009, was severely
hit in 2009 by the global economic downturn as demand for its
exports faded in its main western markets.
- The country's economic activity has been slowing from record
growth rates seen in 2007, when it posted 13.5 percent GDP
growth in the fourth quarter and 10.6 percent for the year.
- The heavily export-reliant economy contracted by 4.8 percent
in 2009, but it was recovering from the crisis at an
above-average pace and was expected to rise by 4.0 percent in
2010, based on the finance ministry's latest forecast.
- The central bank expected the economy to rise by 4.2 percent
last year, but slow down to 3.0 percent rise this year, on
impacts of planned fiscal consolidation and external trends.
                                
 
                                
 LINKS:
- For further details on 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......<ECONSK>
- Schedule of upcoming indicator releases............<SK/ECON09>
- Summary of short-term economic data forecasts......<SK/ECON04>
- Slovak benchmark state bond prices .................<0#SKBMK=>
                                
 
                                
(Reporting by Martin Santa; Editing by John Stonestreet)