Inflation slowed down to 2.3%
- Slovak consumer prices declined in April by 0.1% m/m and the annual CPI inflation slowed down from 2.6% in March to 2.3% in April. The market expected a notch higher inflation at 2.4%, our estimate was even higher at 2.6% y/y.
- The main difference to our forecasts was the food prices, which went down for the third month in a row. They declined by 1% m/m. In this time of the year, the seasonal pattern usually speaks in favour of price growth but it seems that a more important factor was that Slovak retailers lowered prices to counter the cross-border consumer purchases (for Slovaks, weaker currencies of neighbouring countries means cheaper purchases). Compared to last year, food prices were lower by 2.1%. On the contrary, fuel prices grew, as world oil prices are on the rise amid recovery hopes and better market mood.
- On Friday, HICP inflation is out. Based on today's data, we expect slowdown from 1.8% y/y to 1.4% y/y.
- We expect further deceleration of inflation. In May and June, we expect CPI inflation around 2% and it could decline further towards 1% in the third quarter.
