INSTANT VIEW 3-Czech CPI jumps to 6-year high in November

...six-year high 
of 5.0 percent from 4.0 percent a month earlier. 
**************************************************************** 
KEY POINTS: 
(pct change)          Nov          Oct          Nov forecast 
 month/month          0.9          0.6          0.4 
 year/year            5.0          4.0          4.5 
 
 CENTRAL BANK FORECAST: The figure comes in well above the 
central bank's forecast which envisaged a 3.6-4.2 percent annual 
rate for November in its quarterly projection made in October. 
 
 Details of November inflation data.................[nPRA001656] 
 Details of November jobless data...................[nPRa001657] 
 
- The year-on-year inflation rate is the highest since August 
2001. 
- The monthly gain driven by a 4.0 percent rise in food prices, 
the sharpest increase since January 1993. 
- Fuel prices up 2.9 percent month-on-month. 
- Prices for alcohol and tobacco up 0.8 percent on the back of a 
2.8 percent rise in beer prices and a 0.6 percent increase in 
tobacco products prices. 
 
COMMENTARY: 
    DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE, PRAGUE 
    "The entire inflation story is primarily about food prices. 
It is an issue that is outside of the reach of monetary policy 
of the Czech central bank, but there is a risk that the high 
inflation will spill over into inflation expectations, so at the 
moment it is too early to raise interest rates again, but in any 
case monetary policy cannot do without further tightening. 
    "The urgency for further rate hikes has increased, inflation 
is a lot higher than expected, but on the other hand there is 
still the strong crown and its overshooting is so significant 
that it will not allow (the central bank) to hike rates again 
this year. We are sticking to our scenario of (a rate hike) in 
the first quarter of next year." 
 
    PETR DUFEK, ANALYST, CSOB BANK, PRAGUE 
    "This is a much poorer number than the market had expected. 
The year-on-year rate is 1.1 percentage points above the latest 
CNB (central bank) forecast. Our expectations were pessimistic, 
however food prices grew significantly faster than expected. 
    "From the central bank's point of view, today's number is a 
confirmation of the path towards monetary policy tightening, 
which however needs to be very deliberate given the (firm) 
crown." 
 
BACKGROUND: 
- The central bank increased the key two-week repo rate by 25 
basis points to 3.50 percent  in November. 
- Report on last Czech c.bank rate decision      [ID:nL29206268] 
                                  [ID:nPRA001631] [ID:n29679528] 
- 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 
4.4-5.8 percent year-on-year in September 2008 and 3.1-4.5 
percent in March 2009, consumer inflation net of impact of 
indirect tax changes rising 2.5-3.9 percent year-on-year in 
September 2008 and 2.6-4.0 percent in March 2009. 
 
LINKS: 
- For further details on November 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                       
 
 (Reporting by Marek Petrus; editing by Tony Austin) 
  
  Keywords: CZECH ECONOMY/INFLATION  
    

[PRAGUE/Reuters/Finance.cz]