In contrast to analysts’ forecasts concerning the end of deflation in Slovakia, another year-on-year drop in prices occurred in April. According to the latest data released by the Statistics Office on Wednesday, the year-on- year decrease in prices reached a new marker at -0.2 percent.
“This unexpected development can be attributed unequivocally to foods, which saw their first year-on-year drop since 2010,” explained Tatra Banka analyst Juraj Valachy. Thus inflation is expected to be rather low in the next few months as well. Such low inflation can, paradoxically, slow down consumption, as people will be more inclined to wait for better prices thus postponing the purchase. Andrej Arady of VUB Bank pointed out that the low growth in prices currently reflects a broader European problem, as inflation within the Eurozone is still positive but has profoundly drifted away from the European Central Bank’s target of 2 percent. “That increases the likelihood of the monetary authority resorting to yet another cut in official rates in the imminent future, an effort designed either to kick-start growth in prices closer to the desired level of 2 percent or at least stop the drop in inflation,” concluded the analyst.
