INSTANT VIEW 3-Czech July CPI near cbank target, unemployment up

                                
 PRAGUE, Aug 9 (Reuters) - Czech consumer prices rose 0.3
percent in July compared with June, in line with market
expectations and bringing annual inflation near the central bank
target, Czech statistics office data showed on Monday.
                                
 Consumer prices rose at an annual 1.9 percent in July, the
highest annual rise since March 2009.
                                
 Other data showed the jobless rate rose to 8.7 percent of
the workforce in July from 8.5 percent a month earlier, in line
with analysts' estimates and rising for the first time in four
months. It was still off a February peak of 9.9 percent.
                                
 In its August quarterly forecast, the central bank saw July
annual inflation at 2.0 percent. The bank left the main two-week
repo rate at 0.75 percent on Aug 5, and signalled rate stability
in the coming months.
                                
 
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KEY POINTS:
CONSUMER INFLATION
(pct change)           July        June         July fcast
 month/month           0.3         0.0          0.3
 year/year             1.9         1.2          1.9

CZECH UNEMPLOYMENT     July        June         July fcast
 pct of workforce      8.7         8.5          8.7

 Details of July inflation data..................[ID:nPRA005178]
 Details of July jobless data....................[ID:nPRA005179]

INFLATION
- There was a seasonal 12.9 percent rise in the cost of holiday
packages and services. 
- Prices of alcohol and tobacco rose, with a 3.5 percent rise in
beer and 0.5 percent rise in tobacco products.
- This was offset by a 3.6 percent drop in prices of clothes and
a 2.9 percent decline in shoe prices. Some food items also
decreased, including a 24.8 percent monthly decrease in potato
prices.
                                
 
                                
 COMMENTARY:
                                
 
                                
 MICHAL BROZKA, ANALYST, RAIFFEISENBANK, PRAGUE
                                
 "Acceleration of inflation to just below the central bank
forecast is fully in line with expectations. In the coming
months inflation should accelerate further and at the end of the
year it should be around 2.5 percent, which will be to a great
deal due to a low comparative base from the last year."
                                
 "We continue to expect a rise in the Czech central bank
rates in the first quarter of 2011."
                                
 
                                
 DAVID MAREK, CHIEF ANALYST, PATRIA FINANCE
                                
 "The reason for the rise is purely seasonal -- a rise in
prices of holiday packages... There is also the delayed effect
of the rise in consumer tax on tobacco products, other effects
are practically not worth mentioning."
                                
 "Inflation met expectations and has neared the central bank
inflation target. In the coming months it is likely to exceed
(the target) and at the end of the year it can be around 3
percent."
                                
 "But that should be no concern for the central bank because
the monetary policy relevant to inflation should be around 2
percent, in line with the target."
                                
 
                                
 PAVEL MERTLIK, CHIEF ECONOMIST, RAIFFEISENBANK, PRAGUE
                                
 "University graduates hit the labour market in July, causing
a rise in unemployment to 8.7 percent, which corresponds to our
expectations as well as expectations of the market. But the July
rise is smaller than last year and the year before."
                                
 "Unemployment remains high but conditions on the labour
market are improving trend-wise, unlike in the previous two
years."
                                
 
                                
  PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT, PRAGUE
                                
 "CPI is going to move to around 2 percent in the coming
months. Important is that the central bank actually expected CPI
much higher. This level level of inflation is nothing that would
concern the central bank."
                                
 "The main reason for the year-on-year rise is just the base
effect. Regulated prices contributed slightly, but this is
nothing to worry about for the future."
                                
 "Interest rates will remain stable for an extended period."
  
                                
 BACKGROUND:
- June foreign trade figures.....................[ID:nLDE675082]
- Report on last Czech c.bank rate decision......[ID:nLDE67418T]
                                
                               [ID:nPRG004294] [ID:nL5217809]
- 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.
 -The CNB's quarterly prediction sees consumer price inflation
at 1.9 percent in the third and fourth quarters of 2011.

LINKS:
- For further details on July 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                 [CZ/INSTANT]
- Overview of Czech macroeconomic indicators            [CZ/ECI]

- Key data releases in central Europe    [CEE-CONVERGENCE-WATCH]
- 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 Jason Hovet and Jana Mlcochova; Editing by Ruth
Pitchford)