Analysts Expect Inflation to Hover at Around 3.5 percent in Months to Come

Bratislava, 15 July (TASR) - Inflation could stabilise around June's level of 3.5 percent in the months ahead, said UniCredit Bank analyst Lubomir Korsnak in response to inflation data for June published by the Statistics Office on Wednesday. "Towards the end of the year, the secondary effects of higher energy prices (oil and gas) from this spring could finally start feeding into prices. This could slow down the easing of inflation in services, which should otherwise fall more rapidly due to slower economic growth (and lower consumption)," said Korsnak. "Inflation could thus accelerate again towards 4 percent. On average this year, we expect inflation to ease from last year's 4 percent to 3.7 percent, and it should continue to fall (towards 2.5 percent) next year," he added. Given the upcoming elections, Korsnak doesn't expect any major changes in household energy prices next year for the time being. "A more likely scenario would be that, in election year in Slovakia, the global shock in energy prices won't be fully passed on to inflation, but rather to a higher general government deficit through increased energy subsidies. This will only intensify the need for fiscal consolidation and its scope after the elections in autumn 2027, thus raising the risk of above-average inflation even after 2028," warned Korsnak. "Developments in the first half of the year were more favourable than we expected, mainly due to a better trend in food prices. Average inflation for the first six months reached 3.7 percent. We still expect full-year inflation to remain close to 4 percent. Next year, however, it should ease towards 3 percent," said Slovenska sporitelna analyst Marian Kocis. He added that further developments will depend primarily on energy prices and their secondary effects, the trend in salaries and the extent to which higher input costs will be translated into consumer prices. A higher level of uncertainty remains, however. The Statistics Office reported on Wednesday that consumer prices of goods and services fell by 0.1 percent month-on-month (m-o-m) in June 2026, marking the first monthly decline since the beginning of the year, while year-on-year (y-o-y) inflation stood at 3.5 percent, matching March's figure as the lowest rate recorded so far this year. jrg/df