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:
JIRI SKOP, ECONOMIC AND STRATEGY RESEARCH, KOMERCNI BANKA
"The main surprise for us was the drop in core inflation...
which shows a lack of demand pressures."
"The rise in prices should remain moderate as a weak
consumer demand will not allow for fast acceleration."
"Some inflation pressures can be coming from import prices,
and inflation expectations of corporations are rising."
"Overall, we expect average inflation of around 1.5 percent
this year and 2.4 percent in 2011."
RADOMIR JAC, CHIEF ANALYST, GENERALI PPF ASSET MANAGEMENT
"The data thus came in line with our assumptions."
"Yesterday we received stronger than expected data on
household consumption growth (GDP statistics for second quarter)
and we learned about a rather unexpected decline in unemployment
in August."
"The data led to speculation that developments in some parts
of Czech economy are turning more pro-inflationary than what the
Czech national Bank assumes in its quarterly forecast."
"This is true; however, statistics on inflation indicate
that situation remains stable so far and it is worth reminding
that the Czech crown is stronger than what the central bank has
assumed in its forecast."
"I share the view that the Czech National Bank does not have
to rush debate on monetary tightening at its September meeting."
"However, at the end of the year, when a new quarterly
forecast will be available (November meeting), and especially
the December meeting when GDP statistics for the third quarter
will be available and when we will hopefully have a clearer
picture about developments in global economy, it may be
interesting."
"Czech inflation will be above 2.0 percent at that time with
outlook for remaining there also in 2011."
"Still, the central bank is, at the moment, facing lot of
uncertainties about the global economic outlook and also the
Czech crown is stronger than it was supposed to be."
HELENA HORSKA, ECONOMIC RESEARCH, RAIFFEISENBANK
"Reasons for the decline are not surprising. It was mainly
food, fuel, clothing and shoes. More than half of the decline is
caused by seasonal discounts."
"Although household consumption has revived, it is not
reflected in inflation. Prices continue to rise due to the low
comparative base from the last year."
"As the year comes to an end, inflation will accelerate to
above the mid-point of the central bank's 2 percent target. This
does not mean the central bank will have to raise rates."
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.
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)
