For the first time in its modern history, Slovakia saw deflation, as consumer prices recorded a year-on-year drop by 0.1 percent in February, says data of the Slovak Statistics Office. UniCredit Bank analyst Ľubomír Koršňák cited decreasing prices of food and non-alcoholic beverages as the reason behind the February drop.
Food prices decreased also due to usual seasonal factors, with products such as vegetables, meat, oils and fats recording steepest price drops. “On the contrary, it was baked goods and cereal that saw highest month-on-month price hikes,” said Koršňák. According to Home Credit Slovakia analyst Michal Kozub, although prices saw a decrease in February, it is still only a slight development at the moment and won’t be felt by consumers when doing their shopping. He also added that for now “it's not clear how the economy will react to this.” While some countries like the Czech Republic were concerned about potential deflation, other countries experiencing deflation operate without difficulties. Koršňák estimates that future development of prices will teeter on the brink of deflation also in the months to come. He sees crude oil prices as a potential liability. If the Ukrainian crisis escalates and economic sanctions are imposed on Russia with an impact on the exports of Russian oil and gas, it is likely that oil prices on world markets will rise. And thus we could expect that prices in Slovakia will go up sooner, he added.
