PRAGUE, Oct 11 (Reuters) - Czech consumer prices dipped by
0.3 percent in September from August, putting the annual
inflation rate at 2.0 percent, a touch above market
expectations, and in line with the central bank inflation
target.
The Czech statistics office said on Monday the monthly drop
was mainly due to a decline in prices of seasonal holiday
packages.
In its quarterly forecast, the central bank saw September
annual inflation at 2.1 percent.
Analysts polled by Reuters had predicted a 1.9 percent year
on year rise.
****************************************************************
KEY POINTS:
(pct change) Sept Aug Sept forecast
month/month -0.3 -0.3 -0.3
year/year 2.0 1.9 1.9
Details of September inflation data.............[]
- The monthly price drop was mainly due to fall in prices of
package holidays by 14.7 percent due to the end of summer
season.
- In transport, prices of fuels dropped by 1.0 percent and
prices of cars by 0.5 percent.
- In food, prices of bread fell by 4.0 percent, price of some
types of fruit and berry plants fell by 15.1 percent. The price
of sugar fell by 3.6 percent.
- The year-on-year price growth was due to a 4.0 percent rise in
prices of financial services.
- Prices of food and non-alcoholic beverages grew moderately.
- Price of butter rose by 24.9 percent, potatoes by 58.6 percent
and milk product prices and price of eggs rose by 6.3 percent.
COMMENTARY:
RADOMIR JAC, CHIEF ECONOMIST, GENERALI PPF ASSET MANAGEMENT
"In line with our expectation, Czech September CPI inflation
slightly accelerated... In no surprise, the increase in annual
headline inflation was mainly driven by food prices.
"The September reading means that inflation now stands at
the level of the Czech National Bank inflation target and
headline inflation in the whole third quarter was just
marginally below the central bank's forecast.
"Headline inflation is set to grow further in the final
quarter of the year, i.e. above the 2.0 percent inflation target
-- but such development would be in line with the quarterly
forecast of the Czech National Bank, i.e. no surprise for
monetary policy makers from this side.
"However, more importantly, we keep our call that headline
inflation will be above 2.0 percent also in 2011, i.e. above the
central bank's forecast, which is likely to spur debate about
pros and cons of current low level interest rates.
"We believe that a serious debate on monetary policy
tightening -- i.e. a rate hike -- may come at the December
meeting at the earliest, as the Czech National Bank will have at
disposal not only its new quarterly macro forecast -- which will
be at disposal already at the November meeting -- but also
detailed data on third quarter GDP performance in both Czech
Republic and euro zone.
"The Czech crown performance and situation in the global
economy will be the key drivers of any decision of the Czech
central bank, in our opinion.
MICHAL BROZKA, ANALYST, RAIFFEISENBANK
"The result fully complies with our estimates and the
market consensus, so the market should not react to this. The
prices were dragged down by cheaper trips and by lower prices at
petrol stations.
"We can expect inflation of 2.4 percent at the end of the
year. Next year will bring rise in the energy prices and
regulated prices in general, and administrative measures such as
the VAT.
"Despite of this and a rise of commodities there should
remain low inflation environment in the Czech Republic, because
consumer demand is low and the strong crown will help tame the
price growth."
DAVID MAREK, CHIEF ANALYST, PATRIA FINANCE
"Inflation is exactly in line with the inflation target of
the central bank. There was a rise in price of clothing and
shoes as well as school equipment at the start of the academic
year, while the price of holiday packages fell as the summer
season ended."
"I think the result gives no reason to expect a change in
interest rates."
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 September 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)
