NBS Monthly Bulletin, July 2012 - Summary

The annual rate of euro area inflation as measured by the Harmonised Index of Consumer Prices was 2.4% in June, unchanged from its level in the previous month. The exchange rate of the euro against the US dollar appreciated during June in comparison with May. At its meeting on 5 July 2012, the ECB’s Governing Council decided to lower the interest rate on the main refinancing operations of the Eurosystem by 25 basis points to 0.75%, starting from the operation to be settled on 11 July 2012. It also cut the interest rates on the marginal lending facility and the deposit facility by 25 basis points, leaving them at 1.50% and 0.00%, respectively, with effect from 11 July 2012.

Annual HICP inflation in June increased in the Czech Republic (to 3.8%), Hungary (to 5.6%) and Poland (to 4.2%). The Czech koruna, Polish zloty and Hungarian forint all appreciated vis-à-vis the euro during June, after depreciating in the previous month. Among the central banks of these three central European countries, only Česká národní banka changed its monetary-policy settings in June, decreasing the base rate by 25 basis points, to 0.50%, with effect from 29 June 2012. Narodowy Bank Polski and the Magyar Nemzeti Bank left their key rates unchanged, at 4.75% and 7.00%, respectively.

In Slovakia, annual HICP inflation in June increased to 3.7% after six months of decelerating in each of the previous six months. The HICP rate reflected an increase in the annual rate of change in food and services prices, to some extent offset by lower inflation in fuel prices as well as in prices of non-energy industrial goods. Industrial producer price inflation rose in May. The increase in the annual growth rate of the overall producer price index in comparison with the previous month was based mainly on higher inflation in the energy component of the index, with the annual rate of change of wholesale gas prices rising quite sharply (while that of wholesale electricity prices remained largely the same). As for prices of construction work and building materials, their annual rate of change declined moderately in May, while agricultural prices increased year-on-year in the same month after declining in April.

The balance of payments current account surplus increased further in May, with the trade and services balances making the largest contributions due to increases in their surpluses, and all other components also contributing positively. The annual growth rate of the industrial production index remained at a relatively high level in May. This largely reflected the continuing positive trend in the manufacturing component, which was partly offset by negative developments in the mining and energy components. Manufacturing continued to be supported by a strong growth rate in the segment of manufacture of transport equipment, as well as in other manufacturing and repair and installation of machinery and equipment. In the construction component, the annual rate of decline eased in May. As regards sales in the economy in May, their annual growth was unchanged from the previous month. Strong sales figures in industry, retail trade, and the sale and maintenance of motor vehicles were offset mainly by an annual decline in sales in the construction sector and a slowdown in sales growth in the information and communication sector. The economic sentiment indicator declined month-on-month in June and its annual rate of increase was lower than in the previous month. There were month-on-month declines in the industry, construction, and retail trade confidence indicators and in the consumer confidence indicator. The services confidence indicator increased.

Annual growth in the average nominal wage was higher in May than in April, owing to stronger wage growth in the industry and construction sectors. By contrast, there was slower annual wage growth in transportation and storage and in retail trade. Employment stagnated in the sectors under review in May and its annual growth rate was lower than in the previous month. The downward trend in employment in industry persisted, and employment developments in a majority of the other sectors were not particularly favourable. The rate of registered unemployment decreased month-on-month in May, to stand at 13.2%.

Looking at private sector deposits, they increased in May due mainly to a sharp rise in deposits from non-financial corporations. Household deposits increased moderately. The month-on-month increase in corporate deposits was based on an accumulation of demand deposits (which was partly dampened by a slight drop in deposits with an agreed maturity of up to two years). Consequently, the annual growth rate for corporate deposits rose relatively sharply in May. The moderate rise in household deposits was broadly based across most maturity categories, while the annual growth rate remained almost unchanged from the previous month, at a relatively high level. The outstanding stock of loans to the private sector increased month-on-month in May owing mainly to a rise in loans to households. The stock of loans to non-financial corporations remained almost unchanged. As for household borrowing in May, the strongest demand continued to be for housing loans as well as consumer loans. Nevertheless, the annual growth rate of household loans again declined moderately in comparison with the previous month. In the case of loans to non-financial corporations, a decline in loans with a maturity of up to one year was offset by growth in loans with a maturity of between one and five years. As in April, the annual rate of change in loans to non-financial corporations declined in comparison with the previous month. Lending rates for non-financial corporations had a downward tendency in May, in particular rates on investment loans and real estate loans. Lending rates for households remained almost unchanged. As regards deposits rates in May, they declined for both non-financial corporations and households.

Note: The full text of the Slovak version of the NBS Monthly Bulletin for July 2012 will be published on the NBS website on 1 August 2012 at 10.00 a.m.

Petra Pauerová
NBS Spokesperson

National Bank of Slovakia
Press and Editorial Section
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Tel.: +421-2-5787 2142, +421-2-5865 2142, +421-2-5787 2169, +421-2-5865 2169
Internet: http://www.nbs.sk

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