* WHAT: Czech Feb. CPI, Jan. foreign trade, industry
* WHEN: CPI, foreign trade on March 9, industry on March 11
REUTERS FORECASTS:
All forecasts are on Reuters pages <ECONCZ> and in table
[]
Czech monthly inflation probably edged up 0.2 percent in
February from January, bringing the annual rate to 2.0 percent,
a touch below the central bank's forecast for 2.1 percent and
exactly in line with its target.
Foreign trade likely showed a 13.25 billion crown ($761.9
million) surplus, the second highest January surplus on record.
Industrial output is expected to have maintained double
digit annual growth, with January production likely to rise 13
percent year on year thanks to continued demand from Germany and
the rest of the euro zone.
January retail sales were expected to have risen by 2.5
percent year on year after a 0.2 contraction in December driven
by winter sales and a rise in car sales.
FACTORS TO WATCH
Consumer price growth probably accelerated in February,
propelled by global rise in food and oil prices but a strong
crown currency keeps a lid on inflation.
Demand-pull price pressures were expected to remain weak as
households propensity to spend is limited by government
austerity measures and an elevated unemployment.
A government plan to match the lower 10 percent value added
sales tax rate with the upper 20 percent rate already in
October, and not as of the next year, will keep CPI growth
elevated later in the year, Chief Economist Jaromir Sindel of
Citibank in Prague said.
The central bank disregards the first-round effects of
changes in indirect taxes. Its forecast implies no change in
rates for most of the year as inflation is seen staying close to
2 percent, the mid-point of the bank's target.
But the governing board is split -- it voted 4-3 against a
25 basis point rate increase in February -- with hike defenders
warning demand-led pressures in inflation might arise amid signs
consumption and exports are recovering faster than previously
expected.
The key two-week repo rate <CZCBIR=ECI> is at 0.75 percent,
a record low.
Markets were pricing a hike around the middle of the year.
Bets on an early hike were further boosted after the
European Central Bank chief unexpectedly said on Thursday the
euro zone could see its official rate lifted in April, much
sooner than markets expected.
The Czech central bank watches closely the ECB decisions
because the euro zone, Germany in particular, is the
export-oriented country's most important trading partner.
The ECB cut rates by a total of 2.75 percentage points in
seven moves since October 2008. The Czech bank eased policy by a
total of 3 percentage points since August 2008 in eight moves.
Czech stats office website: www.czso.cz
Czech labour and social affairs ministry www.mpsv.cz
All Czech economic data: <ECONALLCZ>
Central and Eastern Europe market report: []
(Reporting by Mirka Krufova, writing by Jana Mlcochova;
Editing by Toby Chopra)
