Analysts: Inflation Should Accelerate Again after Slowdown in April

Stock photo by TASR

Bratislava, May 15 (TASR) – While inflation slowed down in April, it should resume a mild acceleration in May, TASR learnt from UniCredit Bank Czech Republic and Slovakia analyst Lubomir Korsnak on Monday.

The stats office announced earlier on Monday that consumer prices in Slovakia increased by 0.8 percent year-on-year and by 0.1 percent month-on-month in April.

The developments in April can be ascribed to the waning base effect vis-a-vis fuel prices, falling prices of alcoholic beverages, and slow annual growth in the prices of tobacco products.

Meanwhile, the prices of foodstuffs continued to rise at a stable pace in April.

“For the first time in three years we did return to inflation late last year and early this year, but, as expected, inflation remains subdued and isn’t having a substantial effect on the rise in domestic consumption, which is heavily fuelled by the strong labour market. The increasing domestic demand should gradually be reflected in inflation and should work to increase demand-pull inflation, which should be close to 2 percent towards the end of this year,” said Korsnak.

Inflation as such isn’t expected to hit the European Central Bank’s target of 2 percent this year. Korsnak expects it to reach around 1.5 percent late this year.

Slovenska sporitelna bank analyst Katarina Muchova concurred that the base effect in energy and transport prices slowed down and that the prices of foodstuffs failed to repeat their vigorous pace of growth seen in February.

“Inflationary pressures appear only gradually, and it will take some time before inflation gets close to 2 percent. We’re keeping our estimate for annual inflation this year at 1 percent,” she said.