PRAGUE, Oct 8 (Reuters) - Czech consumer prices dropped 0.2
percent in September from August, putting the annual inflation
rate at a slightly higher-than-expected 6.6 percent, from 6.5
percent a month earlier, data showed on Wednesday.
****************************************************************
KEY POINTS:
(pct change) Sept Aug Sept forecast
month/month 0.2 -0.1 -0.3
year/year 6.6 6.5 6.5
CENTRAL BANK FORECAST: The figure comes below the central
bank's forecast, which envisaged a 7.0 percent annual rate for
September in its quarterly projection made in August.
Details of September inflation data.............[]
Details of September jobless data...............[]
- The monthly price drop was due mainly to a decline in leisure
prices, driven by a drop in holiday package costs. Fuel prices
dropped by 1.7 percent.
- Tobacco product prices rose 4.6 percent month-on-month,
showing the delayed impact of a January tax hike.
COMMENTARY:
JAROMIR SINDEL, ANALYST, CITIBANK
"I think central bankers will wait for wage negotiations."
"I don't expect a change in interest rates until the first
quarter of 2009, but if the ECB comes up with some kind of
coordinated action (and cuts rates), which will lead to
appreciation on the crown, then the Czech bank could cut rates
in the fourth quarter."
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT
"The reasons for inflation going up a notch was basically a
higher increase of cigarette prices, which was expected but the
timing was not certain. This will translate (into CPI) less in
the coming months. Relatively cold weather also caused vegetable
prices to go up earlier than last year."
"But the economic outlook is now more important than
inflation, so the central bank will probably cut interest rates
in November."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE:
"Inflation is not falling as fast as expected but under the
current circumstances it is rather data about the economy
(growth) than inflation that are crucial."
"These are both domestically and globally rather worse than
better."
"The situation plays in favour of a further reduction in
interest rates still this year in the Czech Republic and very
quickly in the euro zone too."
MARKET REACTION:
Crown currency unchanged after the data at 24.74 to the euro
<EURCZK=>.
BACKGROUND:
- The central bank decreased the key two-week repo rate by 25
basis points to 3.50 percent <CZCBIR=ECI> on Aug. 7.
- Report on last Czech c.bank rate decision.......[]
[] []
- The central bank (CNB) targets headline inflation, which it
seeks to keep at 3 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 3.4 percent in second quarter of 2009 and 2.5 percent in the
fourth quarter. Consumer inflation net of impact of indirect tax
changes is seen at 3.3 percent in the second quarter of 2009 and
2.5 percent in fourth quarter.
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 Michael Winfrey)
