PRAGUE, Jan 10 (Reuters) - Czech consumer prices rose 0.5
percent in December compared with November, the largest monthly
rise since January 2010 and above market expectations, which
brought the annual inflation rate to 2.3 percent, data showed on
Monday.
Other data showed the jobless rate jumped to 9.6 percent of
the workforce in December from 8.6 percent a month earlier,
higher than analysts' estimates of 9.2 percent. It neared its
February 2010 peak of 9.9 percent.
Analysts have said that unemployment could rise due to an
expected change in the government benefits policy in January.
Redundancies in the public sector driven by the government's
austerity plans may also be showing in the data, they said.
The Czech statistics office data said the monthly rise in
consumer prices was due mainly to food and transport prices.
Annual inflation rose from 2.0 percent reported in November,
and was above the midpoint of the central bank's 2 percent
target as well as above the forecast in the bank's quarterly
outlook.
The stats office said the average rate of inflation for the
whole of 2010 was 1.5 percent.
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KEY POINTS:
CONSUMER INFLATION
(pct change) Dec Nov Dec fcast
month/month 0.5 0.2 0.4
year/year 2.3 2.0 2.2
CZECH UNEMPLOYMENT Dec Nov Dec fcast
pct of workforce 9.6 8.6 9.2
Details of Dec inflation data...................[]
Details of Dec jobless data.....................[]
MARKET REACTION:
The crown <EURCZK=> eased a touch to 24.545 to the euro by
0810 GMT from 24.530 seen before the release.
COMMENTARY:
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"Inflation accelerated according to expectations under
pressure from expensive oil and growing food prices. Neither is
anything new in light of what is happening in commodity
markets."
"Inflation is finishing the year above the central bank
target, but core inflation, which shows domestic demand
pressures, is staying significantly below the inflation target.
Therefore I think that even though inflation is on an upward
path, it is not a reason to immediately respond by raising
interest rates."
"On the other hand, worries that inflation could rise
further and possibly negatively influence inflation expectations
could accelerate the moment to raise rates."
PETR DUFEK, ANALYST, CSOB
"Inflation was driven mainly by food and fuel prices, which
grew as a result of commodity prices..."
"Inflation is above the central bank target but the reasons
are beyond the central bank's influence. It is certainly not
demand-led inflation but it is the commodities."
"But the latest number plays for an earlier tightening than
assumed by the central bank."
"Unemployment is a rather big surprise. This is the biggest
growth within one month ever seen..."
"The reasons are seasonal factors as well as the one-off
effect of changes in the unemployment policy by the government
as of January... which prompted people to register at labour
offices already in December."
SIMON QUIJANO-EVANS, ECONOMIST, CHEUVREUX
"December inflation accelerated slightly to 2.3 percent
year-on-year on stronger food/beverage/tobacco/transport price
increases from 2.2 percent. At the same time, unemployment
jumped to 9.6 percent -- the highest since March, and probably
mainly due to harsh winter effects (a similar situation to
Poland)."
VOJTECH BENDA, SENIOR ANALYST, ING COMMERCIAL BANKING
"Inflation has been driven by rising food and fuel prices,
which are global phenomena. This is given by the previous
appreciation of the dollar against the crown and the euro and
higher oil prices."
"The core inflation data, adjusted for administrative
effects, grew moderately, which indicates that demand-led
inflation is already beginning to pick up moderately."
"But it is still not a strong enough signal for the central
bank to start reassessing its policy."
"(Unemployment) is worse than expected. I think it could be
due to the worse climatic conditions, the winter has been pretty
harsh... so that could have an impact on the construction
segment."
"But the better-than-expected data in industry could improve
that figure in the future."
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT, PRAGUE
"Both data are surprising on the upside. Unemployment was a
big surprise but is explainable by redundancies in the public
sector."
INFLATION
- On an annual basis, prices of fuel rose 16.6 percent, and food
and non-alcoholic beverage prices also grew.
- This was offset by a 3.8 percent drop in prices of clothes and
a 2.2 percent decline in shoe prices.
UNEMPLOYMENT
- Number of registered jobless rose by 55,000 to 562,000.
- Labour Ministry says rise likely due to cumulation of factors
including seasonality, rising number of small business closures
due to lower purchasing power, and changes in rules for
unemployment benefits taking effect in January 2011.
BACKGROUND:
- Nov 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.
-The CNB's quarterly prediction sees consumer price inflation
at 2.0 percent in the fourth quarter this year and at 1.9
percent first quarter of 2012.
LINKS:
- For further details on December 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 Jason Hovet and Jana Mlcochova)
