PRAGUE, Nov 10 (Reuters) - Czech consumer prices remained
flat in October from September, putting the annual inflation
rate at a lower-than-expected 6.0 percent, from 6.6 percent a
month earlier, data showed on Monday.
****************************************************************
KEY POINTS:
(pct change) Oct Sept Oct forecast
month/month 0.0 -0.2 0.2
year/year 6.0 6.6 6.2
CENTRAL BANK FORECAST: The figure comes below the central
bank's forecast, which envisaged a 6.4 percent annual rate for
October in its quarterly projection made in November.
Details of October inflation data...............[]
Details of October jobless data.................[]
- The monthly price stagnation was due mainly to a decline in
fuel prices, which dropped by 4.6 percent while gas prices rose
10.0 percent.
- Tobacco product prices rose 1.0 percent month-on-month,
showing the delayed impact of a January tax hike.
COMMENTARY:
MICHAL BROZKA, ANALYST, RAIFFEISENBANK
"Inflation is slowing down very willingly.
"The October number is obviously influenced falling prices
of cars, an effect which we had expected to show rather in
November.
"Next year, inflation should slow to roughly 2.5 percent
without a problem.
"Unless the crown starts strengthening again, another cut in
rates should come next year rather than on December."
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT
"It seems that disinflation continues faster than generally
assumed.
"The annual number of 6 percent is no miracle but due to the
basis effect it can be expected that now inflation will go down."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"Inflation is a moderately positive surprise.
"The development of inflation confirms that the decision to
cut rates by 75 basis point was correct and it shows room for
further reduction.
"We may see (another cut) by the end of the year or the
middle of the next year.
"We think rates could still decline by 25 to 50 basis
points.
"We will see a much faster decline in inflation than so
far... due to the fading of the tax reform and the global
recession."
JAN VEJMELEK, HEAD OF ECONOMIC AND STRATEGY RESEARCH,
KOMERCNI BANKA
"It is clear that we have started the trend of significant
deceleration of Czech inflation. I'm sure it will continue for
the rest of this year, and especially in January we will see a
significant drop in inflation.
"Next year I would expect a fall to the inflation target. It
is in line with our expectation that Czech interest rates will
go down again. We expect a 25 basis point cut in December, and
two cuts in the first quarter."
MARKET REACTION:
The crown dips to 25.19 to the euro <EURCZK=> at 0823 GMT
from 25.08 ahead of the data.
BACKGROUND:
- The central bank decreased the key two-week repo rate by 75
basis points to 2.75 percent <CZCBIR=ECI> on Nov. 6.
- Report on last Czech c.bank rate decision........[]
[] [] []
- The central bank (CNB) targets headline inflation, which it
seeks to keep at 3 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 2.3 percent in third quarter of 2009 and 2.0 percent in the
first quarter of 2010. Consumer inflation net of impact of
indirect tax changes is seen at 2.3 percent in the third quarter
of 2009 and 2.0 percent in first quarter of 2010.
LINKS:
- For further details on October 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 Jan Lopatka)
