PRAGUE, Jan 17 (Reuters) - Czech industrial producer prices
rose 1.0 percent month-on-month in December and 3.6 percent
year-on-year, above market expectations, data showed on Monday.
Analysts had forecast a 0.6 percent month-on-month increase
and a 3.2 percent year-on-year growth <CZ/ECON04> <CZ/ECON15>
<ECONCZ>.
In November, producer prices rose 0.5 percent month-on-month
and 2.7 percent year-on-year.
The month-on-month growth was the highest over the last 23
months, the statistical office said.
The monthly development was affected by a 9.3 percent growth
in coke prices, along with a 1.5 percent rise in prices of parts
and car parts.
The statistics bureau said agricultural producer prices rose
by 1.4 percent on the month, and showed its fifth annual growth
in a row with 23.6 percent, a sharp turnaround from a series of
falls in the previous two years.
****************************************************************
KEY POINTS:
(change in percent) Dec Nov Dec forecast
PPI
month/month 1.0 0.5 0.6
year/year 3.6 2.7 3.2
(For full table of data........................[])
COMMENTARY:
JIRI SKOP, ECONOMI&STRATEGY RESEARCH, KOMERCNI BANKA
"The development in farm prices is important with regard to
future development in consumer prices... The development
indicates continuing rising pressures on food price growth
within the consumer price index."
"Inflation is driven by commodity prices (and not by)
pressures given by a higher demand. The central bank can relax
and raise interest rates in only the second half of this year."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"It is a reaction to high commodity prices in global
markets, mainly oil prices and natural gas prices, as well as
rising farm prices which subsequently reflect in food prices."
"Czech inflation follows the same trends as price
development in other European countries.
"These factors are beyond the influence of the Czech central
bank and therefore I think they should not have a primary impact
on interest rate decision-making.
"But there is a concern about a rise in inflation
expectations or possibly overspill to other price segments.
"The second-round effect can lead to interest rate
tightening coming several months earlier, we assume a first hike
in the middle of the year."
PAVEL SOBISEK, CHIEF ECONOMIST, UNCREDIT, PRAGUE::
"This is quite significantly above the consensus estimate as
well as UniCredit forecasts. The main reason so far is rising
oil prices, not so much food products in the processing industry
and given the continued rise in agriculture commodities, we can
expect further PPI growth in the coming months.
"It is one of the factors which can add weight to the idea
of interests rates rising earlier than at the end of the year."
INFORMA GLOBAL MARKETS:
"This data is unlikely to have much impact on the CNB
(central bank), though another sharp rise in agricultural prices
will probably increase expectations that CPI will accelerate
later in Q1 and this may force the CNB to act on rates sooner
than it initially planned."
MARKET REACTION:
Crown at 24.365 to the euro <EURCZK=> from 24.370 ahead of
the data.
DETAILS:
- In the year-on-year comparison, producer prices were driven by
a 30.1 percent rise in prices of coke and refinery products, the
statistics office said.
- Prices of chemicals rose by 12.7 percent year-on-year and
prices of metal prices were up 10.1 percent.
- Construction work prices dipped by 0.4 percent on a
year-on-year basis.
- For the whole of 2010 construction work prices fell by 0.2
percent, the first year on year drop since 1994 when the survey
started.
- Prices in the service sector dropped by 1.0 percent
year-on-year and fell by 1.2 percent for the whole of 2010.
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).
- December consumer inflation []
- November industrial output figures []
- Report on last Czech c.bank rate decision......[]
[] []
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 <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>
(Writing by Jana Mlcochova)
