INSTANT VIEW 2-Czech Dec annual CPI edges up, above fcast

    Czech consumer prices rose 0.2 
percent in December from November, beating forecasts of no 
change and lifting the annual inflation rate to 1.7 percent from 
1.5 percent a month earlier. 
    Despite the uptick, annual inflation remained well below the 
2 percent bottom of the tolerance band of the central bank's 
target, which was likely to re-inforce market expectations of 
flat interest rates in the near-term. 
 
KEY POINTS: 
(pct change)          Dec         Nov          Dec forecast 
 month/month          0.2        -0.1          0.0 
 year/year            1.7         1.5          1.6 
 
 (Details of Dec inflation data..................[ID:nPRA001107] 
 (End-Dec unemployment figures...................[ID:nPRA001109] 
 
- The monthly gain comes mainly on the back of a 1.1 percent 
rise in food prices, as prices of fruits and vegetables grew. 
- Fuel prices down 1.2 percent month-on-month, the fourth 
consecutive month of a decline. 
- Clothing and footwear costs inch 0.5 percent higher 
month-on-month. Other price categories show mainly minor 
changes. 
 
COMMENTARY: 
    ALES MICHL, ANALYST, RAIFFEISENBANK, PRAGUE 
    "Inflation is well in check. We have the lowest December 
price growth in three years. 
    "There is nothing to signal that an interest rate increase 
by the central bank should come before the end of the first 
quarter." 
 
MARKET REACTION: 
- Crown a tad higher on the day at 27.590 to the euro . 
 
BACKGROUND: 
- The central bank held the key two-week repo rate steady at 2.5 
percent  in December. 
- Report on last Czech c.bank rate decision      [ID:nL20551907] 
                                                 [ID:nL20599163] 
- 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 September 
2007 and 3.5-4.9 percent in March 2008. 
 
LINKS: 
- For further details on December 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                       
 
 ((Writing by Marek Petrus; Editing by Alan Crosby; 
prague.newsroom@reuters.com; Reuters Messaging: 
marek.petrus.reuters.com@reuters.net; +420 224 190 477)) 
  Keywords: CZECH ECONOMY/INFLATION  
    

[PRAGUE/Reuters/Finance.cz]