PRAGUE, May 10 (Reuters) - Czech consumer prices rose by 0.3
percent in April from the previous month exactly in line with
market expectations while unemployment slumped beyond
expectations as the economy recovered.
Data showed on Monday consumer prices rose 1.1 percent in
April from a year earlier the highest level since June 2009.
The jobless rate dipped to 9.2 percent of the workforce in
April from 9.7 percent a month earlier, declining for a second
straight month, and confirming preliminary numbers released by
the labour minister last week.
Analysts had expected unemployment to dip to 9.5 percent,
and data showed the decline was the biggest drop in absolute
terms since May 2004.
In its May quarterly forecast, the central bank saw April
annual inflation at 0.9 percent. The bank surprisingly cut
interest rates to a record low of 0.75 percent on May 6.
The Czech economy retreated by 3.1 percent year-on-year in
the fourth quarter but rose 0.7 percent from the previous three
months, the second quarterly growth after a three consecutive of
quarters of recession at the turn of 2008 and 2009.
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KEY POINTS:
CONSUMER INFLATION
(pct change) April March April fcast
month/month 0.3 0.3 0.3
year/year 1.1 0.7 1.1
CZECH UNEMPLOYMENT April March April fcast
pct of workforce 9.2 9.7 9.5
Details of April inflation data.................[]
Details of April jobless data...................[]
INFLATION
- The monthly price growth was mainly due to an increase in fuel
prices, by 2.2 percent.
- Household gas prices rose by 3.3 percent, while clothing and
shoe prices rose by 1.3 percent and 1.8 percent respectively.
- Prices of tobacco products rose by 1.0 percent due to a
delayed effect of excise tax hike in January.
- The year-on-year price growth was mainly due to a 21.4 percent
rise in fuel prices. Food prices fell, but less than in past
months.
UNEMPLOYMENT:
- Jobless rate dipped to 9.2 percent of the workforce in April,
from 9.7 percent a month erlier. Analysts in a Reuters poll saw
unemployment at 9.5 percent.
COMMENTARY:
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT BANK, PRAGUE
"The fact that the number of jobless dropped by 32,000 in
April is very significant in itself. We can see that,
apparently, mainly manufacturing companies are now hiring
employees as flexibly as they had fired them at the beginning of
the crisis. This is a sign that there is demand in the economy,
at least in the manufacturing sector."
VOJTECH BENDA, SENIOR ECONOMIST, ING COMMERCIAL BANKING, PRAGUE
"The drop in unemployment signals that the household
purchasing power and private consumption are both improving. The
return of March retail sales to growth could be maintained in
coming months, it is possible to expect a more favourable
numbers of private consumption."
JAN VEJMELEK, HEAD OF ECONOMIC&STRATEGY RESEARCH, KOMERCNI BANKA
"Inflation has been gradually moving up over the past months
but remains safely below the inflation target. Consumer prices
are pushed up by factors that are beyond the central bank
control. It is mainly fuel, gas and alcoholic beverages, as well
as tobacco, which is driven by a higher excise tax."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"As for unemployment, the reading is positive by all means,
although the number was flagged to the market late last week...
I think the overall Czech macro data... show that the Czech
economy is no exception and surprises positively. The strength
of the recovery is probably stronger than many had assumed."
"But inflation remains low and is driven by external
factors, whether it is commodity prices or administrative
changes in regulated prices or tax rates. The domestic economy
does not generate any significant demand-led pressures."
"We can expect several months of stable rates, I do not
expect another cut in interest rates."
RADOMIR JAC, CHIEF ANALYST, GENERALI PPF ASSET MANAGEMENT
"While in line with the market expectations, Czech April
inflation is 0.2 percentage points above the fresh forecast of
the Czech central bank for average inflation in the second
quarter of this year."
"At the same time, the unemployment rate reports quite sharp
decline in April -- certainly sharper than expected."
"Together with better than expected data on real economic
activity, that were published before the weekend, the fresh data
are representing upside risk for the recently released inflation
forecast of the Czech central bank."
MARKET REACTION:
Crown up 0.4 percent on the day as regional markets rally
following an EU agreement on rescue fund for troubled euro zone
members. It traded unchanged after the data at 25.650 to the
euro <EURCZK=>.
BACKGROUND:
- March foreign trade figures....................[]
- Report on last Czech c.bank rate decision......[]
[] [] [] []
- The central bank (CNB) targets headline inflation this year,
which it seeks to keep at 2 percent year-on-year, allowing for
fluctuations by plus/minus one percentage point from this level.
- The CNB's quarterly prediction sees consumer price inflation
of 1.8 percent in second quarter of 2011 and 1.8 percent in the
third quarter of 2011.
LINKS:
- For further details on April 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 []
- Overview of Czech macroeconomic indicators []
- Key data releases in central Europe []
- 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>
(Reporting by Jana Mlcochova)
