INSTANT VIEW 2-Czech June CPI inches up in line with forecast

...inflation rate to rise to 2.5 percent from 2.4 
percent a month earlier. 
 
KEY POINTS: 
(pct change)          June        May          June forecast 
 month/month          0.3         0.4           0.3 
 year/year            2.5         2.4           2.5 
 
 CENTRAL BANK FORECAST. 1.8-2.2 percent annual CPI rate for June 
envisaged in its most recent projection unveiled in April. 
 
 (Details of June inflation data.................[nPRA001389] 
 (Details of June jobless data...................[nPRA001390] 
 
- The monthly rise comes on the back of a 2.1 percent rise in 
tobacco prices, the sixth consecutive month of gains following 
increases in tobacco excise taxes by the government. 
- Fuel prices rose 1.3 percent on the month, the fifth month of 
increases. 
- Food prices up 0.2 percent month-on-month. 
 
 COMMENTARY: 
    RADOMIR JAC, CHIEF ANALYST, PPF ASSET MANAGEMENT, PRAGUE 
    "The result means that actual inflation remains 0.5 
percentage points above the quarterly forecast of the Czech 
central bank as published in April. The June result fully 
supports a case for further interest rate hikes: a 25 basis 
point hike to 3.00 percent at the July board meeting is a done 
deal and at least one more rate hike will follow in rest of the 
year, although we think that it is reasonable to speculate on 
scenario that the repo rate will reach 3.50 percent by the 
year-end." 
 
MARKET REACTION 
    Crown shows no significant reaction, trading at 28.56 to the 
euro . 
     
BACKGROUND: 
- The central bank increased the key two-week repo rate by 25 
basis points to 2.75 percent  in May. 
- Report on last Czech c.bank rate decision      [ID:nPRG000403] 
                                 [ID:nL28398864] [ID:nL10648783] 
- 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 June 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] 
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- For Czech money markets data click on                 
- Czech money guide                                       
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