PRAGUE, July 17 (Reuters) - Czech industrial producer prices
rose by a faster-than-expected 0.7 percent in June from May,
causing the annual...
...rate of growth in factory gate costs to hit a
2-year high of 4.6 percent.
The quickening rise in the underlying inflation measure was
likely to bolster the market's view that the central bank (CNB)
will raise interest rates as early as July following a hike in 8
in May.
The year-on-year figure is the highest since April 2005,
when PPI rose 5.6 percent..
KEY POINTS:
(change in percent) June May June forecast
month/month 0.7 0.6 0.3
year/year 4.6 4.1 4.3
(For full table of data...........................[nPRA001398])
- The statistics office says a 4.1 percent monthly gain in coke
and crude oil refinery costs, a 0.9 percent rise in basic metals
prices, and a 0.4 percent up-tick in food, beverages and tobacco
products are the main driving forces of the monthly PPI
increase.
- It adds that costs for non-metal mineral goods rose 1.2
percent on a monthly basis.
- Separately, the statistical bureau said agriculture producer
prices rise 1.7 percent in June from May for a 9.1 percent
year-on-year increase, down from a 12.1 percent gain a month
ago.
- Costs for construction work up 0.5 percent over the previous
month, while prices for construction materials and goods edge up
1.0 percent.
ANALYST COMMENTARY:
JAN VEJMELEK, HEAD OF ECONOMIC & STRATEGY RESEARCH, KOMERCNI
BANKA, PRAGUE
"Growth in producer prices exceeded even our highest
estimate, and it is a big surprise for the market. It's another
pro-inflationary factor that indicates that a second raising of
rates after an (expected) 25 basis point hike during the third
quarter is a real possibility."
MARKET REACTION:
Czech crown slightly stronger to the euro after
the data. Trades at 28.257 at 0717 GMT against 28.261 just prior
to the data release.
BACKGROUND:
- Industrial PPI and agriculture producer prices are watched
closely by the markets as leading indicators for consumer
inflation which is targeted by the Czech central bank (CNB).
- However, analysts have pointed out the pass-through of changes
in production costs into overall consumer prices has been
limited recently.
- June consumer inflation [ID:nL11564563]
[ID:nL11222777]
- May industrial output figures [ID:nL13592187]
- Report on last Czech c.bank rate decision [ID:nPRG000403]
[ID:nL28398864] [ID:nL10648783]
LINKS:
- For further details on June producer prices and past data,
Reuters 3000 Xtra users can click on the statistical bureau's
Website:
http://www.czso.cz/eng/csu.nsf/kalendar/2004-ipc
- 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/PRICES