Slovakia´s inflation increased by 1.9% year-on-year in December 2018, the lowest figure since December 2017, with core inflation amounting at 1.8% and net inflation at 2%, the Slovak Statistics Office reported on January 15. According to the Slovenska sporitelna bank analyst Katarina Muchova December inflation was mostly influenced by transport prices, which decreased by 3.5% month-on-month.
Total inflation was negatively affected by core inflation which fell by -0.31 percentage points (pp) m/m in December 2018 and by regulated prices, up by 0.18 pp. Indirect taxes had no impact. Core inflation was affected by food prices up by 0.02 pp and net inflation was down by -0.33pp.
Consumer prices went down by 0.1% in total m/m in December 2018. On average, from January to December consumer prices increased by 2.5% y/y in total. The index of consumer prices decreased m/m in households of employees by 0.2 %. It increased in households of pensioners by 0.1%. And there was no change in low-income households.
In y/y terms the index of consumer prices in December went up in both employees´ and pension households, by 1.9% and 2.1%, respectively.
Inflation development in December 2018 was a surprise, with the most significant decrease in transport prices, according to the UniCredit Bank Czech Republic and Slovakia analyst Lubomir Korsnak.
“Transport prices were main reason for deceleration in inflation in December, with demand inflation surprisingly slowing down as a consequence of this, as well. Foodstuff prices also showed slightly slower than expected growth,” Korsnak said, daily Ekonomika.sme.sk reporting.
Korsnak expects inflation to accelerate again at the beginning of 2019, with an increase in gas prices and other regulated energy prices. The impact of a new 2.5% special levy of net turnover for retail chains remains uncertain, but key market players might still be hit by it.
“It can be expected that they will try to transfer new costs either to their customers, or to suppliers. Raising prices and transferring cost to end-users seems to be the easier way. In this case food-price growth might accelerate by 2pp and overall inflation by 0.2-0.3% this year. Average inflation might accelerate towards 3%, with low-income and pensioner households being affected by price growth the most with regards to its structure,” Korsnak added, reported by daily Teraz.sk.