PRAGUE, July 12 (Reuters) - Czech consumer prices were flat
in June compared with May, below market expectations for a 0.2
percent monthly rise, Czech statistics office data showed on
Monday.
Consumer prices rose 1.2 percent in June from a year
earlier, the same annual rise as in May.
The jobless rate dipped to 8.5 percent of the workforce in
June from 8.7 percent a month earlier, declining for the fourth
consecutive month since hitting 9.9 percent in February.
Analysts in a Reuters poll saw unemployment at 8.6 percent.
In its May quarterly forecast, the central bank saw June
annual inflation at 0.9 percent. The bank left the main two-week
repo rate at 0.75 percent on June 23, and signalled a rate
stability in coming months.
The Czech economy expanded by 1.1 percent year-on-year in
the first quarter and rose 0.5 percent from the previous three
months, the third quarterly growth after a three consecutive
quarters of recession at the turn of 2008 and 2009.
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KEY POINTS:
CONSUMER INFLATION
(pct change) June May June fcast
month/month 0.0 0.1 0.2
year/year 1.2 1.2 1.3
CZECH UNEMPLOYMENT June May June fcast
pct of workforce 8.5 8.7 8.6
Details of June inflation data..................[]
Details of June jobless data....................[]
COMMENTARY:
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"As for unemployment, the economic (recovery) has a stronger
impact on the labour market than expected.
"This time it is really an economic matter, not a matter of
seasonal factors.
"This is definitely good news, because without an
improvement in the labour market, there would be no improvement
in household consumption and there would be no marked rise in
GDP. So this gives a good outlook for the GDP data in coming
quarters.
"As for CPI, the monthly stagnation gives a chance for
interest rate stability for a longer period of time than earlier
expected, which confirms comments (last week) of Governor
Miroslav Singer, and his Vice Governor Mojmir Hampl.
"The data can possible mean that bond yields could drop a
little bit, due to the inflation outlook, among other factors."
MIROSLAV FRAYER, ANALYST, KOMERCNI BANKA
"One of the worst periods for the Czech labour market is
finally behind us. June data confirmed the improving
macroeconomic indicators and trends from abroad and domestically
suggest a gradual economic recovery... in particular
manufacturing, but positive effects from other sectors are also
seen.
"Substantial risk remains with the situation in public
finances of European states. Needed fiscal consolidation should
be reflected negatively on the overall economic development,
which can result in dampening the rebound damping, which would
be translated to the Czech economy.
"The unemployment rate is expected at the end of this year,
slightly below 9 percent."
RADOMIR JAC, CHIEF ANALYST, GENERALI PPF ASSET MANAGEMENT
"Inflation came in slightly below market expectations but
remains 0.3 percentage points above the central bank forecast.
"However, the central bank is likely to keep the view that
higher inflation is mainly driven by items that are out of
control of monetary policy, i.e. mainly by energy, food and
regulated prices, while demand-side inflation pressures in Czech
economy virtually still do not exist at this moment.
"Still, inflation stands above the bank's forecast while the
crown is somewhat weaker than what the forecast assumed, so it
will be interesting to watch the new quarterly forecast which
the central bank will publish in early August.
"The unemployment rate came in slightly below the market
expectation and is lower than what the central bank forecast,
which is the case not only of June but of the whole second
quarter.
"Theoretically this is another reason that should push risk
of the central bank's inflation forecast in pro-inflationary
direction.
"However, recent comments made by Czech top central bankers
indicate that monetary policy makers have remained sanguine
about possibility of pro-inflationary risk so far.
"Still, both the unemployment data and news from industry
and export sectors indicate that the economy was doing well in
the second quarter of the year, but as long as there are
uncertainties about global developments ,and mainly about
situation in euro zone, the central bank will not rush to come
with any measures which could lead to undesired strengthening of
the crown and which could jeopardize the ongoing recovery."
MICHAL BROZKA, ANALYST, RAIFFEISENBANK
"The present level of inflation is surely nothing that would
worry us and it likely does not worry the central bank either.
"Inflation is likely to exceed the central bank (2 percent)
target in the summer months but that will be only because of the
comparative base from the last year and due to a rise in
regulated prices which the bank cannot influence.
"The bank will likely wait with rising the interest rates
for the first quarter of 2011."
DETAILS:
INFLATION
- The monthly price development was affected by a seasonal 3.5
percent rise in holiday packages and services.
- This was offset by a 0.8 percent drop in prices of clothes, a
1.5 decline in shoe prices, and a 1.5 percent drop in prices of
alcoholic beverages.
- Prices of food and non-alcoholic beverages grew mainly due to
a 57.7 percent rise in potato prices, as well as a rise in
prices of pasta, yoghurts and butter.
- In an annual comparison, prices of food and non-alcoholic
beverages stopped declining after 18 months, the statistics
office said. This was due to a rise in the prices of vegetables,
among others.
UNEMPLOYMENT:
- Jobless rate dipped to 8.5 percent of the workforce in June,
from 8.7 percent a month earlier. Analysts in a Reuters poll saw
unemployment at 8.6 percent.
BACKGROUND:
- May foreign trade figures......................[]
- Report on last Czech c.bank rate decision......[]
[] [] []
- The central bank (CNB) targets headline inflation this year,
which it seeks to keep at 2 percent year-on-year, allowing for
fluctuations by plus/minus one percentage point from this level.
- The CNB's quarterly prediction sees consumer price inflation
of 1.8 percent in second quarter of 2011 and 1.8 percent in the
third quarter of 2011.
LINKS:
- For further details on June other past inflation data, Reuters
3000 Xtra users can click on the Czech Statistical Bureau's
website:
http://www.czso.cz/eng/csu.nsf/kalendar/2004-ISC
- For LIVE Czech economic data releases, click on <ECONCZ>
- Instant Views on other Czech data []
- Overview of Czech macroeconomic indicators []
- Key data releases in central Europe []
- For Czech money markets data click on <CZKVIEW>
- Czech money guide <CZK/1>
- Czech benchmark state bond prices <0#CZBMK=>
- Czech forward money market rates <CZKFRA>
(Reporting by Jana Mlcochova; editing by John Stonestreet)
