POLL-Czech Oct CPI seen tumbling as oil costs fall

PRAGUE, Oct 30 (Reuters) - Czech annual inflation is expected to have eased to a near 1-1/2-year low in October as energy and fuel costs fell following a drop in world crude oil prices, a Reuters poll of analysts showed on Monday.

The consumer price index (CPI), the inflation gauge watched by markets and targeted by the central bank (CNB), is seen declining by 0.2 percent <CZCPI=ECI> in October from September, according to the median forecast in the poll of 12 analysts.

The survey showed the annual inflation rate was forecast to slow to 1.6 percent <CZCPIY=ECI>, the lowest reading since May 2005 and below the bottom of the CNB's target band.

The data is due for release on Nov. 8.

Natural gas prices for households, set by the energy market regulator, fell 5.5 percent from October, following a 17 percent jump a year ago, which was widely expected to result in a sharp fall in the year-on-year inflation rate.

Consumer prices grew 2.7 percent in September, within the CNB's goal of keeping inflation in a band of plus or minus one percentage point from a 3 percent target mid-point.

"(October) CPI will be driven by big base effects... On top of that fuel prices continued falling," said Agata Urbanska, emerging Europe economist at ING Wholesale Banking in London.

Analysts said October inflation figures could lead the central bank (CNB) to extend the pause in monetary tightening following two 25 basis points interest rate increases in July and September.

But they agreed the CPI drop would likely be only temporary and inflation would creep back up towards and above the 3 percent midpoint of the central bank's target as a revival in consumer spending fuels price rises.

The poll also predicted the September foreign trade balance should show a 5 billion crown monthly surplus <CZFTB=ECI>, helped by the falling price of crude oil, little changed from 5.3 billion crowns in September 2005.

The trade balance data are due out on Friday.

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((Reporting by Mirka Krufova; Writing by Marek Petrus; Editing by Ian Jones; Reuters Messaging: rm://marek.petrus.reuters.com@reuters.net; e-mail: prague.newsroom@reuters.com or marek.petrus@reuters.com; Tel: +420 224 190 477))

Keywords: ECONOMY CZECH POLL