PRAGUE, May 17 (Reuters) - Czech industrial producer prices
rose by a much higher-than-expected 0.7 percent in April from
March and 0.4 percent from a year ago, showing the first annual
growth since November 2008, data showed on Monday.
Analysts had forecast a 0.2 percent month-on-month increase
in industrial PPI and a drop of 0.2 percent year-on-year
<CZ/ECON04> <CZ/ECON15>.
The month-on-month growth was driven mainly by a 6.2 percent
rise in raw materials prices, 5.5 percent gain in chemicals
prices, and a 4 percent increase in coke and refining products,
the statistics office said.
In March, producer prices had dropped 0.8 percent
year-on-year.
The statistics bureau said agricultural producer prices rose
by 0.2 percent on the month, and showed a 4.5 percent
year-on-year drop, narrowing slightly from a 4.9 percent fall in
March.
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KEY POINTS:
(change in percent) April March April forecast
PPI
month/month 0.7 0.1 0.2
year/year 0.4 -0.8 -0.2
(For full table of data........................[])
- Prices of food products dropped 0.5 percent month on month.
- Prices of metals and metal products grew by 1.8 percent.
- Construction work prices dipped by 0.1 percent on the month
and 0.2 percent year-on-year.
- Prices in the service sector grew 0.6 percent on the month and
fell 1.7 percent year-on-year due to a drop in advertising
prices.
COMMENTARY:
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"Producer prices surprised; they are higher than expected,
mainly due to prices of commodities, oil, coal and iron ore. All
this suggests the world economy may be rebounding faster than
expected..."
"However, production prices have been lifted out of
deflation, so we certainly can't talk about deflation risks in
the Czech economy."
"By the end of the year, production inflation should near 2
percent."
"For the central bank, the implication... is rather an
argument for stability in interest rates rather than further
easing. So I think this figure rather supports an argument for
possible higher rates on the market than lower."
PAVEL MERTLIK, CHIEF ECONOMIST, RAIFFEISENBANK, PRAGUE
"We didn't expect to move into a positive year-on-year
(growth) in PPI until May. We got there a month early, and our
estimate that producer prices will grow on average 1.5 percent
for all of 2010 is getting under pressure -- it is not possible
to rule out a higher value on the full-year index. "
"From the view of monetary policy, it seems the April result
in PPI closed the space for dovish thoughts on further easing of
interest rates."
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT, PRAGUE
"I don't think it will be any concern at this stage. The
link between PPI and CPI is rather indirect, and it may take
time for pressure in PPI to seep through to CPI. It is just one
very small piece of information for the central bank."
MARKET REACTION:
Crown slightly firmer at 25.505 to the euro <EURCZK=> from
25.53 ahead of the data.
BACKGROUND:
- Industrial PPI and agriculture producer prices are watched
closely by the markets as leading indicators for consumer
inflation, which is targeted by the Czech central bank (CNB).
- April consumer inflation []
[]
- March industrial output figures []
- Report on last Czech c.bank rate decision......[]
[] [] [] []
LINKS:
- For further details on April producer prices and past data,
Reuters 3000 Xtra users can click on the statistical bureau's
Website:
http://www.czso.cz/eng/csu.nsf/kalendar/2004-ipc
- 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>
(Writing by Jason Hovet)
