Neither the tiny month-on-month growth of consumer prices in May by 0.1 percent nor the year-on-year growth of 7.6 percent has surprised analysts. UniBanka analyst Viliam Patoprsty suggests that the inflation figures in May are ending the period of relatively low year-on-year inflation because it would already climb above 8 percent in June due to administrative measures. A more significant increase in food prices was of moderate surprise, but this growth was of a seasonal character. „In line with expectations, motor fuel prices decreased. The seasonal increase of prices in hotels and restaurants service did not surprise analysts either,“ said Mr. Patoprsty.

CSOB analyst Marek Gabris said that almost all other categories showed a slower month-on-month price increase or a more significant decline than in May 2002. „But it is likely that May inflation hit its bottom this year,“ said Mr. Gabris. Already in June, health care reform and increasing cigarette prices will affect the price level. But seasonally decreasing food prices should curb pressure on the rising price level. In spite of already including the cigarette price increase into May expenditures, prices in the category of tobacco and tobacco products did not increase in May. Tatra Banka analyst Elizej Macho said that price drops were reported in sectors of transport, recreation and culture, furniture and house maintenance as well as postal and telecommunications services. Prices in the education sector remained unchanged.

According to Mr. Patoprsty, higher excise taxes as of July 1 should increase the price level by about 1.1 percent during the next two months. „I assume, that the price level will grow by 0.6 percent in June month-on-month while the year-on-year increase will be at 8.6 percent,“ said Mr. Patoprsty. In July it should swell by 0.5 percent month on month and 9.4 percent year on year. Mr. Gabris is less optimistic and predicts that headline inflation would jump above 9 percent in July. Thus, due to administrative measures, Mr. Patoprsty has revised the expectation of the average annual inflation and increased it from the original 8 percent to 8.5 percent. Mr. Gabris assumes that by the end of the year inflation might end within the lower half of the revised expectation of the National of Slovakia. The central bank predicts end-year inflation at 8.4-9.7 percent. Mr. Macho maintains that due to other pressures in the country’s economy, end-year inflation should exceed 9 percent.

In May, consumer prices in Slovakia increased by 0.1 percent from a month ago. Monthly core inflation, which determines the rate of consumer price growth cleared of the influence of regulated prices and other administrative measures, was 0.1 percent in May. Net inflation, which clears price development of the influence of indirect tax changes was negative for the first time this year, at minus 0.1 percent. In May year-on-year headline and core inflation represented 7.6 and 1.9 percent, respectively.