Slovakia remains in deflation despite increasing food, fuel prices

Slovakia has remained in deflation with an overall 0.1 percent drop in year-on-year prices in May, the Slovak Statistics Office announced Friday.

Despite the comparatively strong growth in the prices of fuels and foods over the past three months, their prices remain considerably lower than last year, according to UniCredit Bank Czech Republic and Slovakia analyst Lubomir Korsnak.

"Fuels are 9 percent cheaper on the year, and they exercise a downward effect on overall inflation of 0.2 percentage point," said Korsnak.

In terms of foodstuffs alone, the rise in prices was mainly fuelled by the prices of fruits and vegetables that were higher than is usually the case in May. "Vegetables in particular are showing a comparatively dynamic price increase even in annual terms, even reaching double digits," said Korsnak.

According to Slovenska Sporitelna analyst Katarina Muchova, inflation should hover around zero in the next few months, but unlike the past year and a half it should be more often just above zero, rather than below it.

"We expect a more pronounced acceleration in the annual rise in prices, around 1 percent, to come about late this year, once the statistical effect of the drop in oil prices wanes," said Muchova. Endit