INSTANT VIEW 3-Czech March retail sales post record growth

...in household 
spending, data showed on Monday. 
    Year-on-year growth was highest on record under the 
comparative data series, according to Reuters data, beating a 
previous high of 9.6 percent from September 2003.  
 
KEY POINTS: 
(change in percent)      March       Feb        March forecast 
RETAIL SALES (y/y)       10.5     10.1 (9.4)         6.5 
 
(Click on [ID:nPRA001308] for full table of March retail sales) 
 
- The headline, unadjusted figure includes car sales and 
repairs, fuel sales and spending on a variety of consumer goods, 
including foodstuffs. 
- Ex-autos, retail sales up 8.8 percent year-on-year in real and 
seasonally adjusted terms, which the statistics office says is 
the second highest growth number on record. 
- Seasonally-adjusted sales including the auto segment rise by a 
real 1.7 percent month-on-month in March and jump 0.7 percent 
excluding the auto segment. 
 
COMMENTARY: 
    RADOMIR JAC, CHIEF ECONOMIST, PPF ASSET MANAGEMENT, PRAGUE 
    "Retail sales clearly indicate that private consumption 
growth is robust in Czech economy. Together with the latest 
inflation data on the upside, and the fading anti-inflationary 
impact of the crown exchange rate, the retail sales data is 
another strong signal for the Czech central bank to restart 
process of monetary policy tightening.  
    "It is becoming evident that higher interest rates are 
necessary in order to get medium-term inflationary risks -- 
which are currently pointing north -- under control.  
    "We keep our view that the Czech central bank has enough 
arguments to raise its interest rates as soon as its May 31 
board meeting, with a further policy tightening to follow in 
second half of the year (2007)." 
    
    JAN VEJMELEK, HEAD OF ECONOMICS AND STRATEGY RESEARCH, 
KOMERCNI BANKA, PRAGUE 
    "Stronger growth in March retail sales than the market had 
expected clearly points at the high dynamics of consumer demand. 
It is another argument to expect a rise in interest rates as 
early as next week. The only anti-inflation factor which had 
been present in the past -- a firming crown -- has faded away in 
recent months." 
 
MARKET REACTION: 
- Crown ticks up to 28.175 to the euro  by 0711 GMT. 
 
BACKGROUND: 
- April consumer inflation                       [ID:nL10545694] 
                                                 [ID:nL09606545] 
- March industrial output figures                [ID:nL15302934] 
- Report on last Czech c.bank rate decision      [ID:nPRA001284] 
                                 [ID:nPRG000331] [ID:nL26624395] 
 
LINKS: 
- For further details on March retail sales and past data, 
Reuters 3000 Xtra users can click on the Czech Statistical 
Bureau's website: 
    http://www.czso.cz/eng/csu.nsf/kalendar/2004-slu 
 
- 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/RETAIL  
    

[PRAGUE/Reuters/Finance.cz]