Slovakia: Inflation inches down in June
July 12, 2011
In June, consumer prices remained flat over the previous month, below the 0.3% increase observed in May. The reading mainly reflected lower food prices (-0.4% month-on-month), particularly for vegetables (-10.7% mom) due to the lower demand that resulted from the fears surrounding the outbreak of E.coli bacteria in Germany. As a result, annual headline inflation inched down from 4.0% in May to 3.9% in June, while annual average HICP inflation (based on the harmonized index of consumer prices) rose from 2.1% in May to 2.4% in June. That said, inflationary pressures are not likely to ease meaningfully going forward, as Slovak's Regulatory Office for Network Industries (uRSO, urad pre Regulaciu Siet'ov?ch Odvetvi), a public utility regulator, confirmed an average 6.9% hike in gas prices for households as of 20 July. Consequently, the increase in energy prices is expected to fuel inflation during the summer months. The Central Bank expects annual average HICP inflation to reach 4.1% this year before moderating to 3.3% in 2012.