INSTANT VIEW 2-Czech Sept CPI fall bigger than forecast

    PRAGUE, Oct 9 (Reuters) - Czech consumer prices fell by a 
sharper than forecast 0.7 percent in September from August, 
squeezing the annual inflation rate to 2.7 percent, below the 3 
percent midpoint of the central bank target. 
 
KEY POINTS: 
(pct change)          Sept        Aug          Sept forecast 
 month/month         -0.7         0.2         -0.5 
 year/year            2.7         3.1          2.9 
 
 (Details of Sept inflation data.................[ID:nPRA000966] 
 (End-Sept unemployment figures..................[ID:nPRA000967] 
 
- The monthly fall was driven by a seasonal 18.2 percent drop in 
holiday prices. 
- Fuel prices down 2.6 percent month-on-month, the first decline 
after five consecutive months of gains. 
- Food prices down 0.2 percent, mainly on falling vegetable and 
fruit prices. 
- Other categories of the consumer price index (CPI) mostly show 
small changes. 
 
COMMENTARY: 
    DAVID MAREK, CHIEF ANALYST, PATRIA FINANCE 
    "This number could tame expectations of a fast interest rate 
increase." 
 
MARKET REACTION: 
- Crown ticks lower to 28.235 per euro <EURCZK=> by 0710 GMT 
from 28.220 just before. Debt yields mixed and little changed. 
 
BACKGROUND: 
- The central bank increased the key two-week repo rate by 25 
basis points to 2.50 percent <CZCBIR=ECI> last month. Five out 
of seven policymakers voted for the hike, while the remaining 
two wanted no rate change. 
- Report on last Czech c.bank rate decision      [ID:nL27342627] 
                                 [ID:nL27365976] [ID:nPRA000961] 
- 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 bank's newly-updated quarterly inflation prediction sees 
consumer prices rising 2.8-4.2 percent year-on-year in June 2007 
and 3.3-4.7 percent in December 2007. 
 
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       <ECONCZ> 
- 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                <CZKVIEW> 
- Czech money guide                                      <CZK/1> 
- Czech benchmark state bond prices                   <0#CZBMK=> 
- Czech forward money market rates                      <CZKFRA> 
 
 ((Writing by Marek Petrus; Editing by Chris Pizzey; 
prague.newsroom@reuters.com; Reuters Messaging: 
marek.petrus.reuters.com@reuters.net; +420 224 190 477)) 
  Keywords: ECONOMY CZECH INFLATION