INSTANT VIEW 4-Czech Sept annual CPI 2.8 pct, matches fcast

...earlier, 
in line with expectations. 
**************************************************************** 
KEY POINTS: 
(pct change)          Sept         Aug         Sept forecast 
 month/month         -0.3          0.3         -0.4 
 year/year            2.8          2.4          2.8 
 
 CENTRAL BANK FORECAST: 2.7-3.1 percent annual CPI rate for 
September envisaged in its most recent projection unveiled in 
July. 
 
 (Details of September inflation data...............[nPRA001535] 
 (Details of September jobless data.................[nPRA001537] 
 
- Holiday package prices drop 16.1 percent from August, driven 
by seasonal factors. 
- Fuel prices dip 0.9 percent on the month, the second fall 
after five months of growth. 
- Food prices up 0.1 percent month-on-month. 
- Regulated rents up 1.3 percent on the month, prices of coal 
and other solid household fuels up 3.7 percent. 
- Goods prices up 0.1 percent on the month, services prices down 
0.9 percent. 
 
COMMENTARY: 
    RADOMIR JAC, CHIEF ANALYST, PPF ASSET MANAGEMENT, PRAGUE 
    "I see no surprise in September data on Czech inflation. As 
expected, following their disinflationary impact in July and 
August, the methodological changes in calculation of recreation 
prices had a pro-inflationary impact this time, which will be 
reflected also by some marginal increase in core inflation. 
Overall, there is no surprise for the market this time. 
    "However, in the months to come, Czech inflation is bound to 
grow due to the base effect, price deregulation and at the 
beginning of 2008 also due to increase in indirect taxes. As 
early as October we may see annual inflation in the 3.5 percent 
area.  
    "With regard to the central bank, the major news in 
September inflation statistics is the behaviour of recreation 
prices: They indicate that the annual decline in this price 
category, as observed in previous months, is rather a temporary 
phenomenon caused by the new methodology, thus without any 
longer-term relevance for monetary policy." 
 
    MICHAL BROZKA, ANALYST, RAIFFEISENBANK, PRAGUE 
    "Food prices continued to rise slightly. Our concern about 
their faster growth did not materialise and CPI rose in line 
with market expectations. I do not expect any market reaction. 
    "Next month, inflation will exceed the three percent target 
of the central bank given the statistical base effects. However, 
the CNB (central bank) should leave rates unchanged for now 
given the crown's firming." 
     
    DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE, PRAGUE 
    "The CNB (central bank) had forecast 2.9 percent (annual 
inflation), so we are still hovering below its forecast, and 
given how much the crown has firmed, interest rates are most 
likely to hold steady until the year-end. 
    "In that respect, there is no reason to change the market's 
outlook, so market interest rates are unlikely to be moved." 
 
MARKET REACTION: 
- Crown flat at 27.535 versus the euro  by 0718 GMT. 
Money market rates and debt yields show scant reaction, if any. 
 
BACKGROUND: 
- The central bank increased the key two-week repo rate by 25 
basis points to 3.25 percent  in August. 
- Report on last Czech c.bank rate decision      [ID:nL27772602] 
  [ID:nPRA001517] [ID:nPRA001518] [ID:nPRA001533] [ID:n05533999] 
- 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 
3.5-4.9 percent year-on-year in June 2008 and 3.5-4.9 percent in 
December 2008, consumer inflation net of impact of indirect tax 
changes rising 2.6-4.0 percent year-on-year in June 2008 and 
3.0-4.4 percent in December 2008. 
 
LINKS: 
- For further details on September 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                       
 
 

[PRAGUE/Reuters/Finance.cz]