INSTANT VIEW 4-Czech retail sales rise slows as expected in May

...April's 8.1 percent rise, data 
showed on Thursday. 
    The report pointed at robust consumer demand, reinforcing 
market expectations of a 25 basis point interest rate increase 
to 3 percent by the central bank next week to prevent a weak 
crown and buoyant spending from stoking inflation pressures. 
 
KEY POINTS: 
(change in percent)      May        April       May forecast 
RETAIL SALES (y/y)        7.0        8.1         7.5 
 
(Click on [ID:nPRA001401] for full table of May retail sales) 
 
- The headline, unadjusted figure includes car sales and 
repairs, fuel sales and spending on a variety of consumer goods, 
including foodstuffs. 
- Seasonally-adjusted retail sales rise by a real 0.8 percent 
month-on-month in May. Excluding the auto segment, the monthly 
gain amounted to 0.6 percent. 
- Ex-autos, retail sales up 7.1 percent year-on-year in real and 
seasonally and working-day adjusted terms, unchanged from April. 
 
COMMENTARY: 
    JAN VEJMELEK, HEAD OF ECONOMICS AND STRATEGY RESEARCH, 
KOMERCNI BANKA 
    "Consumer demand is strong and justifies a rate increase by 
the CNB (central bank)." 
     
    RADOMIR JAC, CHIEF ANALYST, PPF ASSET MANAGEMENT, PRAGUE 
    "No big surprise there, the result is actually pretty well 
in line with the expectation. The retail sales data underscore 
the case for higher interest rates, as the sales dynamics and 
hence growth of private consumption is going to be visibly 
stronger this year than in 2006. 
    "Strong domestic demand is already among pro-inflationary 
factors that are present in Czech economy. However, the data as 
released today is unlikely to move the market, as monetary 
policy tightening is expected for the upcoming meeting of the 
CNB board (on July 26) anyway." 
     
    PETR DUFEK, ANALYST, CSOB BANK, PRAGUE 
    "It still holds that private consumption is fuelling 
economic growth, but it has yet to create demand-pull 
inflationary pressures. 
    "For the market, this is peripheral news which should have 
no impact on the crown and yields." 
 
MARKET REACTION: 
- Crown slightly firmer from open at 28.235 per euro  
by 0715 GMT. Government debt yields flat to slightly higher. 
 
BACKGROUND: 
- 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 May 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 RETAIL/