Analyst: Inflation Growth Expected to Continue

Bratislava, April 16 (TASR) - Price growth in Slovakia continues mainly as a result of the increase in VAT tax, rising costs including wages, and due to the overall uncertainty of the economic environment, 365.bank analyst Tomas Bohacek stated on Wednesday in response to the published statistics of March's harmonized inflation. According to Bohacek, inflation will continue to rise, since the "second wave" of growth began in early April after the implementation of the transaction tax, which companies are passing on to the prices of their goods and services through various mechanisms. "In specific categories, the prices of some food products continue to rise (milk, eggs, and flour-based products), and due to the outbreak of foot-and-mouth disease, the prices of dairy and meat products will also increase, albeit temporarily," the analyst explained. The hotel and restaurant sector is facing rising operating costs as well as growing demand. The impact of the lower VAT rate for accommodation has been reflected in prices mainly as a mitigating factor, meaning that if the original rate had remained, price growth in the sector would have been even higher. Bohacek expects the peak of inflation growth to come at the beginning of summer, when the various factors within this year's second wave of price increases are likely to culminate. "The longer-term issue remains mainly the impact of US trade policy, where a reduced ten percent tariff rate for the EU has been in effect for three months. If an agreement is not reached, a third wave of price growth could occur in Slovakia at the beginning of autumn," the analyst added. mf