Analysts: Inflation Driven by Base Effect in Foodstuffs and Crude Oil

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Bratislava, February 15 (TASR) – The pick-up in inflation in January was mainly propelled by the base effect in foodstuffs and fuels (crude oil), said UniCredit Bank Czech Republic and Slovakia analyst Lubomir Korsnak on Wednesday.

Demand-pull inflation also gathered some momentum, whereas regulated prices continued to fall.

The Slovak Statistics Office announced earlier on Wednesday that consumer prices increased by 0.7 percent year-on-year and by 0.3 percent month-on-month in January.

Unlike in the previous few years, inflation is beginning to eat into the real incomes of households somewhat. “Inflation should only recover in piecemeal fashion, however, remaining subdued and not damping down domestic consumption,” said Korsnak.

In the next few months inflation is expected to continue to grow. Nevertheless, it will be slow in closing in on the European Central Bank’s (ECB) target of just under 2 percent, and it’s actually unlikely to reach it this year, said Korsnak.

Tatra Banka analyst Tibor Lorincz remarked that annual inflation growth in January was the most rapid since September 2013. “There’s still a long way to go to the ECB goal, which is slightly below 2 percent,” he added.