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Slovak inflation hits 15-month low, seen easing

Published 03/16/2009, 05:12 AM
Updated 03/16/2009, 05:16 AM

BRATISLAVA, March 16 (Reuters) - Slovak inflation slowed for the fifth consecutive month and reached a 15-month low in February thanks to food and transportation prices, data showed on Monday, and analysts saw more easing this year.

Annual inflation in the youngest euro zone state stood at 2.4 percent in February, down from 2.7 percent in the previous month and a touch below market forecast of 2.5 percent price growth, the Statistics Office said [ID:nLG637555].

"Decline in prices of food and transportation compensated for growth in cost of services in February," said Maria Valachyova, senior analyst at Slovenska Sporitelna.

"Inflation will continue easing in the coming months, towards an annual 2.0 percent in the summer. We see 2009 average annual inflation at 2.2-2.3 percent," she said.

Consumer prices were flat on the month in February, compared to a 0.3 percent monthly rise in January.

Slovakia's consumer price trends track global inflation developments as cooling economic activity combined with lower oil costs keep a lid on shop prices, albeit Slovak inflation is still higher than in the rest of the euro zone.

The euro area inflation, which hit a 10-year low in January, will have a U-shaped profile this year, likely dipping to negative territory mid-year before rising again, mainly due to energy prices, European Central Bank research showed last week.

Opinion polls had shown concerns that inflation in Slovakia would accelerate after euro zone entry in January, a scenario seen in previous euro zone entrants, but economic crisis and the lower cost of oil have so far counterbalanced such risks.

"The euro does not contribute to price growth as it was expected by the public," said UniCredit Bank analyst Lubomir Korsnak.

Korsnak said prices of mid and long-term durable goods were almost at par with levels in older members of the single currency area, but Slovakia's catch-up effect was visible mainly in services. (Reporting by Martin Santa; Editing by Andy Bruce)

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