PRAGUE, Sept 9 (Reuters) - Czech consumer prices dipped by
0.3 percent in August from July, putting the annual inflation
rate at 1.9 percent, a touch below market expectations.
The Czech statistics office said on Thursday the drop was
mainly due to a decrease in the prices of vegetables, some types
of fruit, and in fuel prices.
The central bank targets inflation at 2 percent +/- 1
percentage point.
In its quarterly forecast, the bank saw August inflation at
2.0 percent, the same as analysts in a Reuters poll who also
predicted annual price growth of 2.0 percent.
****************************************************************
KEY POINTS:
(pct change) Aug July Aug forecast
month/month -0.3 0.3 -0.2
year/year 1.9 1.9 2.0
Details of August inflation data................[]
* For main points of the breakdown, see below commentary.
COMMENTARY:
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"Inflation remains at a safely low level, so the central
bank is unlikely to move with interest rates in the near
future."
"The monetary policy inflation that the central bank
watches, and core inflation adjusted for volatile price
segments, are both very low. In fact, the core inflation remains
deeply in the negative."
"All this indicates that rates should stay stable in the
next three to four quarters."
MAIN POINTS
- The monthly price drop was mainly due to a seasonal 26.6
percent decrease in prices of vegetables, 13.0 percent decline
in pitted fruits and berry plants prices.
- Fuel prices fell by 1.9 percent month on month.
- Prices of shoes declined by 1.5 percent due to seasonal sales.
- The year on year growth was driven by prices of food and
non-alcoholic beverages, as well as housing, alcoholic beverages
and tobacco.
COMMENTARY:
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"Inflation remains at a safely low levels, so the central
bank is unlikely to move with interest rates in the near
future."
"The monetary policy inflation that the central bank
watches, or core inflation adjusted for volatile price segments,
are both very low. In fact, the core inflation remains deeply in
the negative."
"All this indicates that rates should stay stable in the
next three to four quarters."
BACKGROUND:
- The central bank decreased the key two-week repo rate by 25
basis points to 0.75 percent <CZCBIR=ECI> on May 6.
- Report on last Czech c.bank rate decision......[]
- The central bank (CNB) targets headline inflation, 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 1.9 percent in third quarter of 2011 and 1.9 percent in the
fourth quarter of 2011.
LINKS:
- For further details on August 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 Toby Chopra)
