INSTANT VIEW 3-Czech Dec PPI 2.6 pct y/y, tad above fcast

    Czech industrial producer prices 
held steady in December from November, lifting the annual index 
(PPI) to 2.6 percent, a touch above the consensus market 
forecast. 
 
KEY POINTS: 
(change in percent)       Dec        Nov        Dec forecast 
 month/month              0.0       -0.2       -0.1 
 year/year                2.6        2.0        2.5 
 
 (For full table of data...........................[nPRA001115) 
 
- A 0.5 percent rise in basic metals and metallurgy prices was 
offset by a 0.5 percent drop in chemicals prices and a 0.4 
percent decline in factory-gate costs for electrical and optical 
equipment. 
- Coke and crude oil refinery prices dipped 0.1 percent; other 
components of the PPI index hold steady or show little changes. 
- Separately, the statistical bureau says agriculture producer 
prices rise 3.4 percent in December from November to post a 4.9 
percent year-on-year increase, up sharply from a 1.3 percent 
annual gain a month earlier. 
 
COMMENTARY: 
    PETR DUFEK, ANALYST, CSOB BANK, PRAGUE 
    "Prices in the industrial sector showed a favourable 
development and indicate no inflation threat, not even a hidden 
one. 
    "For the market, the numbers merely confirm the current 
trend and require no reaction from the central bank." 
     
    MICHAL BROZKA, ANALYST, RAIFFEISENBANK, PRAGUE 
    "Producer price growth is only negligibly above the median 
market estimate, so there is no reason for a significant market 
reaction. 
    "Falling crude oil prices will push producer prices slightly 
lower in the coming months, while food prices will work in the 
opposite direction." 
 
MARKET REACTION: 
- Crown steady at 27.785 per euro  by 0820 GMT. 
 
BACKGROUND: 
- Industrial PPI and agriculture producer prices are watched 
closely by the markets as leading indicators for consumer 
inflation which is targeted by the Czech central bank (CNB). 
- However, analysts have pointed out the pass-through of changes 
in production costs into overall consumer prices has been 
limited in recent months. 
 
- Dec consumer inflation                         [ID:nL09833629] 
                                                 [ID:nL09931969] 
- Nov industrial output figures                  [ID:nL15857064] 
- Report on last Czech c.bank rate decision      [ID:nL20551907] 
                                                 [ID:nL20599163] 
 
LINKS: 
- For further details on December producer prices and past data, 
Reuters 3000 Xtra users can click on the statistical bureau's 
Website: 
    http://www.czso.cz/eng/csu.nsf/kalendar/2004-ipc 
 
- 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/PRICES  
    

[PRAGUE/Reuters/Finance.cz]