PRAGUE, Dec 8 (Reuters) - Czech consumer prices dropped in
line with expectations in November on the back of falling fuel
and food prices, putting the annual inflation rate at 4.4
percent, from 6.0 percent a month earlier, data showed on
Monday.
****************************************************************
KEY POINTS:
(pct change) Nov Oct Nov forecast
month/month -0.5 0.0 -0.5
year/year 4.4 6.0 4.5
CENTRAL BANK FORECAST: The figure comes below the central
bank's forecast, which envisaged a 5.5 percent annual rate for
November in its quarterly projection made in November.
Details of November inflation data..............[]
Details of November jobless data................[]
- The monthly price drop was due mainly to a decline in fuel
prices, which dropped by 9.2 percent.
- Food prices dropped 0.9 percent month-on-month.
- Tobacco product prices rose 0.9 percent month-on-month,
showing the delayed impact of a January tax hike.
COMMENTARY:
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT
"It is interesting that (inflation) got more than a one
percentage point below the level forecast by the central bank in
October, which opens some room for lowering (interest) rates,
although it is a question whether it is only a shift in time or
whether the extend of disinflation will be more significant."
"For the time being I cannot answer that question. In the
data I cannot see many signals that would show that the extend
can really be more significant, bigger... Rather it is only
about the shift in time for now."
MICHAL BROZKA, ANALYST, RAIFFEISENBANK:
"It is probable the Czech National Bank will be
undershooting the 3-percent inflation target from the beginning
of 2009, while it may stay below 2 percent for much of the year.
"For the CNB, the data today confirms it can continue
bravely lower with interest rates already at the mid-December
meeting. We expect a 25 basis point lowering."
DAVID MAREK, CHIEF ANALYST, PATRIA FINANCE:
"Inflation data is more important now as the next interest
rate-setting meeting is approaching. And a dilemma that
financial markets will be solving is whether the bank cuts rates
by 25 basis points or 50 basis points."
"Such a steep drop in inflation leaves a door open for
cutting rates by 50 basis points."
MARKET REACTION:
Crown initially weakens to 25.93 to the euro after the
inflation and trade data but returns to 25.79 by 0840 GMT, from
25.82 ahead of the figures.
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 November 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)
