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Development of consumer prices in December 2007

Consumer prices, measured by the harmonized index of consumer prices, increased by 2.5% on a year-on-year basis ( by 2.4% in November). Headline inflation, excluding energy and unprocessed foodstuffs (core inflation), reached the level of 2.8% (2.6% in November). In comparison to the previous month, the consumer prices went up by 0.3% while the core inflation increased by 0.3% on a month-on-month basis. The average year-on-year rate of inflation for 12 months reached the level of 1.9.0% (2% previous month) from January to December 2007.

Inflation, measured by the harmonized index of consumer prices, reached higher level in December when compared with the NBS´s expectations, above all for the reason of more considerable than expected increase in foodstuffs, fuels and industrial goods prices. On the other hand the growth rate of prices of services decreased when compared with the NBS´s expectation. In comparison to the inflationary target of the NBS for the end of the year 2007 (under 2%), the real level of year-end inflation is higher than 0.5 of a percentage point. The set target overrun was affected by the factors outside the influence of the monetary policy, namely by the global increase in the foodstuffs and energy commodities prices which appeared in consumer prices of foodstuffs and fuels at the end of the year 2007. Within the basic structure of inflation, the year-on-year growth rate of goods prices accelerated and the growth rate of services prices stagnated. In prices of goods there was further deceleration of decline in industrial goods prices and at the same time it came to further acceleration of the growth rate of foodstuffs prices. The development of industrial goods prices was influenced by the deceleration of the year-on-year decline in prices of industrial goods excluding energy, as well as by the acceleration of the growth rate of energy prices. In energy prices there was an acceleration of the year-on-year growth rate of fuel prices. The year-on-year growth rate of foodstuff prices accelerated, when the growth rate of prices for processed foodstuffs increased on the one hand, ( under the influence of bread prices, flour and its products, milk and butter) the growth rate of prices for unprocessed foodstuffs decreased on the other hand ( year-on-year decline in vegetables prices).

Prices of services stagnated on a year-on-year basis, when in comparison with the previous month, the year-on-year growth rate of the most services remained unchanged, however, the prices of financial and restaurant services increased. The year-on-year growth rate of headline inflation should accelerate in January 2008 when compared with December 2007, above all under the influence of regulated prices increase. In regulated prices there should be an increase in electricity prices, prices for gas, heating and public transport should report a slight increase, also the fees for waste transport should be higher. Prices for foodstuffs and services should reflect a higher year-on-year growth rate.

Jana Kováčová
Spokesperson of the NBS

National Bank of Slovakia
Communications Section
Imricha Karvasa 1, 813 25 Bratislava, Slovak Republic
Tel.: +421-2-5787 2161,+421-2-5865 2161, +421-2-5787 2166, +421-2-5865 2166

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