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Slovakia: Inflation slightly higher than expected
Real estate news By Stanislava Pravdova
Thu, Oct 11 2007, 14:39 GMT
The Slovak Statistical Office released consumer price inflation (CPI) figures for September this morning. Headline inflation came out at 2.8% y/y, slightly higher than our and consensus forecast of 2.7% y/y and accelerated from August’s 2.3% y/y. Core inflation was also higher than the consensus forecast of 2.8% y/y, 3.0% y/y. Nonetheless, today’s slightly stronger-than-expected acceleration in inflation will not have any effect on the monetary policy decision at the end of this month when the Slovak central bank (NBS) decides on interest rates.
Looking at the figure, the main culprit - like everywhere else in the region - is higher food prices (especially prices of milk and other milk products) but also higher prices in the housing sector.
Despite today’s inflation acceleration, the NBS will not change its interest rate setting at the end of this month and we expect the NBS to stay on hold for the rest of this year. Nonetheless, the NBS has a reason to be anxious these days, not because of inflation but because of the budget deficit revision carried out by Eurostat. Although the NBS has assured at many occasions that the budget recalculation will not threaten the eurozone entry in 2009, there is definitely nervousness about the budget deficit being revised more than expected.
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