INSTANT VIEW 2-Czech April CPI beats fcast with 2.5 pct rise

...of 2.5 
percent from 1.9 percent a month earlier. 
    The figure returned to the central bank's tolerance band of 
one percentage point either side of a 3 percent target and was 
likely to lead markets to shorten the odds on an interest rate 
increase as early as this month. 
 
KEY POINTS: 
(pct change)          April       March        April forecast 
 month/month          0.7         0.3           0.4 
 year/year            2.5         1.9           2.2 
 NOTE. The central bank had predicted 2.1-2.2 percent inflation 
on an annual basis, according to its April Inflation Report. 
 
 (Details of April inflation data................[ID:nPRA001288] 
 (Details of April jobless data..................[ID:nL10317377] 
 
- The monthly rise comes on the back of a 1.6 percent rise in 
food prices, a 4.3 percent rise in fuel costs and 2.1 percent 
growth in tobacco prices because of a delayed impact of a sales 
tax hike. 
- Natural gas prices up 1.4 percent, heating costs 0.6 percent 
higher, regulated rents edge up 0.9 percent. 
- Clothing and footwear prices up 1.2 percent month-on-month. 
 
COMMENTARY: 
    ALES MICHL, ANALYST, RAIFFEISENBANK, PRAGUE 
    "We do not expect today's surprisingly high inflation number 
to be decisive for a rise in interest rates in May, even though 
it is tempting to consider raising rates because of a weaker 
crown. 
    "In our view, the Czech National Bank will wait until at 
least June for data about gross domestic product (GDP) growth 
and wages in the first quarter." 
 
MARKET REACTION: 
- Crown flat at 28.240 per euro  after recovering from 
Wednesday's 2-month lows. Bond yields edge higher. 
 
BACKGROUND: 
- The central bank held the key two-week repo rate steady at 2.5 
percent  in April. 
- Report on last Czech c.bank rate decision      [ID:nPRG000331] 
                                 [ID:nL26624395] [ID:nPRA001284] 
- 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 prices rising 
3.2-4.2 percent year-on-year in December 2007 and 2.7-4.1 
percent in December 2008, consumer inflation net of impact of 
indirect tax changes rising 2.1-3.5 percent year-on-year in 
March 2008 and 2.2-3.6 percent in September 2008. 
 
LINKS: 
- For further details on April 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        
- 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                 
- Czech money guide                                       
- Czech benchmark state bond prices                    
- Czech forward money market rates                       
 
  
  Keywords: CZECH ECONOMY/INFLATION  
    

[PRAGUE/Reuters/Finance.cz]