Prague- The Czech Republic's inflation rose slightly while unemployment remained steady in September, according to government data released Wednesday.

The inflation rate year-on-year rose a notch to 6.6 per cent in September, from 6.5 per cent recorded in August, mainly due to higher costs for education, vacations and tobacco products, the Czech Statistical Office said.

"It is inflation's last tremor before it quickly heads downward," said David Marek, a chief economist at Patria brokerage and consultancy.

Consumer prices in September fell 0.2 per cent compared to August as costs of fuel and some foodstuffs declined, the statisticians said. Vacations were also cheaper month-on-month.

While prices have jumped in 2008, peaking at 7.5 per cent in January, analysts expect a drop to 3 per cent next year, allowing the central bank to further slash borrowing costs that are the lowest in the European Union.

The bank cut the key two-week repo rate to 3.5 per cent in August, opting to fight quickly firming Czech currency rather than climbing prices that have been undermining real wages.

"We expect another cut in November and one more in the first half of next year," Marek said.

The country's unemployment rate based on a number of jobseekers registered with state labour authorities however still remained at low 5.3 per cent in September, the Labour and Social Affairs Ministry said.

The economy in the former central European Soviet satellite has boomed in recent years at around 6-per-cent growth rates following an influx of foreign investment accompanied by labour shortages.

But the economy is expected to cool significantly this and next year due to the firming koruna and falling demand in the country's chief export market, the eurozone. (dpa)