INSTANT VIEW 2-Czech Jan PPI sharply above fcast

    Czech industrial producer prices 
rose by 1.2 percent in January from December, lifting the annual 
index (PPI) to 2.8 percent, well above the consensus market 
forecast and the highest monthly jump since October 2000. 
 
KEY POINTS: 
(change in percent)       Jan        Dec        Jan forecast 
 month/month              1.2        0.0        0.7 
 year/year                2.8        2.6        2.3 
 
 (For full table of data...........................[nPRA001161) 
 
- A 7.5 percent rise in electricity, gas and water prices is as 
the heart of the increase. Other power and heating related 
prices also rise significantly. 
- The major exception comes in coke and crude oil refinery 
prices, which dip 6.2 percent, their sixth consecutive monthly 
fall. 
- Separately, the statistical bureau says agriculture producer 
prices rise 2.1 percent in January from December to post an 11.8 
percent year-on-year increase, up sharply from a 4.9 percent 
annual gain a month earlier. 
- The bureau said it had revised the weighting structure from 
2005, but that the calculation of industrial producer and 
construction prices did not change. However, agriculture prices 
and service prices from January 2005 to December 2006 are no 
longer valid. 
 
COMMENTARY: 
    JAN VEJMELEK, HEAD OF ECONOMIC AND STRATEGY RESEARCH 
INVESTMENT BANKING, KOMERCNI BANKA, PRAGUE 
    "Producer prices have not been filtering through to consumer 
inflation growth for a while. Therefore, I do not expect a 
reaction on the market to the data. The low January consumer 
inflation has led us to expect a rise in interest rates only in 
the third quarter of 2007." 
     
MARKET REACTION: 
- The crown shows is slightly stronger despite the data, trading 
at 28.140 to the euro  at 0816 GMT from 28.175 just 
ahead of the data release at 0800 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. 
 
- Jan consumer inflation                         [ID:nL14403418] 
- Dec industrial output figures                  [ID:nL14213337] 
- Report on last Czech c.bank rate decision      [ID:nPRA001122] 
                                 [ID:nL02157584] [ID:nL25513531] 
 
LINKS: 
- For further details on January 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                       
 
 

[PRAGUE/Reuters/Finance.cz]