INSTANT VIEW 3-Czech Dec CPI 0.2 pct, in line with fcast

                                
 PRAGUE, Jan 11 (Reuters) - Czech consumer prices rose by 0.2
percent in December from the previous month, driven by rising
prices of food and non-alcoholic drinks, exactly in line with
market expectations.
                                
 Data showed on Monday consumer prices rose 1.0 percent in
December from a year earlier, the highest level since June.
                                
 Data also showed the jobless rate rose to 9.2 percent of the
workforce in December from 8.6 percent a month earlier, the
highest level since January 2006. Analysts in a Reuters poll saw
unemployment at 9.3 percent.
                                
 In its November quarterly forecast, the central bank
forecast December annual inflation at 0.5 percent. The bank cut
interest rates to a record low of 1.0 percent on December 16. 
                                
 The Czech economy retreated by 4.1 percent year-on-year in
the third quarter but rose 0.8 percent from the previous three
months, the second quarterly growth after a two consecutive of
quarters of recession at the turn of 2008 and 2009.
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KEY POINTS:
CONSUMER INFLATION
(pct change)           Dec         Nov          Dec forecast
 month/month           0.2         0.2          0.2
 year/year             1.0         0.5          1.0

CZECH UNEMPLOYMENT     Dec         Nov          Dec forecast
 pct of workforce      9.2         8.6          9.3

 Details of December inflation data..............[ID:nPRA004913]
 Details of December jobless data................[ID:nPRG003814]

- The monthly price growth was mainly due to a increase in the
prices of food and beverages, by 1.6 percent.
- Transport prices dropped by 0.7 percent, driven by a 1.7
percent fall in car prices and a 0.6 percent drop in fuel costs.
- Overall goods prices rose 0.2 percent, while prices of
services were flat.
- In the year-on-year comparison, fuel prices rose by 15.7
percent. Food prices dropped 3.5 percent.
- The averaGe inflation rate for 2009 was 1.0 percent.
                                
 
COMMENTARY:
                                
 PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT, PRAGUE
"It seems the development (in unemployment) is very similar
to what was happening a year ago, the rise is not higher than
last year. So the question whether we will see a second wave in
the rise of unemployment is still open.  Indications will appear
in January."
                                
 "Disinflation in the food sector is waning out... Basically
from the monetary viewpoint, the rise in CPI is not very
relevant because it was caused by volatile items which are out
of reach of monetary policy action."
                                
 
                                
 DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
                                
 "Inflation was in line with forecast and the reasons did not
surprise either: it is mainly higher food prices, which were on
the other hand partially offset by cheaper fuel."
                                
 "Inflation is above central bank's forecast but probably in
the upcoming half a year the bank will not do anything."
                                
 "Inflation develops in line with expectations, the economy
overcame a short-term deflation and in the latter part of the
year prices should near the inflation target of the central bank
which is a reason for rates to remain unchanged at least the
first half of the year."
                                
 
MARKET REACTION:
                                
 The crown currency trades a touch lower at 26.265 to the
euro <EURCZK==> from 26.245 ahead of the data.

BACKGROUND:
- November foreign trade figures.................[ID:nLDE60606U]
- Report on last Czech c.bank rate decision.......[ID:nDE5BF128]
                                
[ID:nPRG003844] [ID:nDE5BF161] [ID:nPRA004895] [ID:nDE5BM155]
- The central bank (CNB) targets headline inflation last year,
which it seeks to keep at 3 percent year-on-year, allowing for
fluctuations by plus/minus one percentage point from this level.
The target will fall to 2 percent this year.
- The CNB's quarterly prediction sees consumer price inflation
of 2.4 percent in fourth quarter of 2010 and 2.2 percent in the
first quarter of 2011.

LINKS:
- For further details on December 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 Jan Lopatka)