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Statement on the development of inflation (Development of consumer prices in January 2007)

Consumer prices, measured by the harmonized index, increased by 2.2% on a  year-on-year basis (3.7% in December 2006). Headline inflation, excluding energy and unprocessed foodstuffs (core inflation), reached the level of 1.8% (2.5% in December). In comparison to the previous month, consumer prices went up by 0.5% while core inflation reported the same month-on-month value. Inflation, measured by the harmonized index of consumer prices, reached a slightly higher level in January when compared with the NBS´ s expectations.

Within the basic structure of inflation, the year-on-year growth rate of prices of goods decreased in January, when within their development the growth rate of industrial goods prices decelerated, but on the other hand the acceleration of the growth rate of foodstuff prices continued. Decrease of the year-on-year growth rate of industrial goods prices reflected the year-on-year decrease of industrial goods prices without energy (where the VAT decrease on pharmaceuticals has been reflected): however, above all, deceleration of growth rate of energy prices. Within energy prices, the decrease of fuel prices recorded further deepening and prices of other kinds of energy markedly decelerated on the year-on-year basis. Foodstuff prices reported acceleration of the year-on-year growth rate, with a higher year-on-year growth rate both of processed but, above all, unprocessed foodstuffs. As for prices of processed foodstuffs, the prices for bread, other bakery products, sugar products and dairy products continued to increase. In terms of unprocessed foodstuffs, the year-on-year growth rate of vegetable prices accelerated. The year-on-year growth rate of prices for services decelerated, affected by lower year-on-year growth rate in prices for services connected with housing. At the same time the year on-year growth rate of prices of recreation and personal services slowed. On the other hand, the year-on-year growth rate of prices for services connected with transport increased because of the increase in fare prices in bus transport.

The year-on-year growth rate of headline inflation should slightly decelerate in February when compared with January under the influence of expected development of prices of goods, where there should be a decrease in the year-on-year growth rate of both energy and foodstuffs prices. Conversely, prices for services should slightly accelerate on the year-on-year basis.

Jana Kovacova
Communications Section

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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