PRAGUE, July 15 (Reuters) - Czech industrial producer prices
were flat in June when compared with the previous month and
showed an annual decline of 4.4 percent, the biggest drop since
1991, when records started.
In May, industrial producer prices dropped 3.8 percent
year-on-year.
The statistics bureau said agricultural producer prices rose
4.6 percent on the month, but showed a 27.9 percent year-on-year
drop, decelerating from May's 31.4 percent fall.
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KEY POINTS:
(change in percent) June May June forecast
PPI
month/month 0.0 -0.4 0.0
year/year -4.4 -3.8 -4.4
(For full table of data........................[])
- The monthly development in the producer price index (PPI)
included a 2.7 percent drop in prices of metal products.
- Prices of coke and refining products rose 9.7 percent while
prices of chemicals rose 1.4 percent.
COMMENTARY:
JAROMIR SINDEL, CHIEF ECONMIST, CITIBANK
"Industry managed to offset price growth linked with oil,
therefore it is a strong disinflationary number that... reflects
a drop in economic activity and should point to a
disinflationary environment during the second half of 2009."
"It is a signal that inflation will remain in the real
economy within the boundaries of the (central bank's) inflation
target. On the other hand the central bank is concerned about
the impact of the weaker crown on core inflation, so from this
point of view the impact will not be so strong."
"But it could lead, in line with our expectations, to a
decline in interest rates in the third quarter."
HELENA HORSKA, ANALYST, RAIFFEISENBANK
"The recession is showing its full impact on industry
producers who sell stocks as they are pressured by the deep
downturn."
"None of the latest economic data shows a threat of
inflation, so speculation of further rate easing may
strengthen."
JIRI SKOP, ECONOMIC&STRATERY RESEARCH, KOMERCNI BANKA
"Industrial prices were not surprising for the market."
"A significant rise in agriculture producers prices might
signal an approaching end of disinflation pressures related to
food prices, within the consumer basket."
"Year-on-year drops (in industrial PPI) should continue in
the coming months."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"Industrial producer prices correspond to estimates, there's
no surprise and the result has no impact on our expectations for
the development of consumer prices or on our outlook for
interest rates. We expect the central bank to cut rates one more
time."
MARKET REACTION:
Crown currency <EURCZK=> at 25.94, marginally down from
25.89 ahead of the data
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).
- June consumer inflation []
[]
- May industrial output figures []
[]
- Report on last Czech c.bank rate decision.......[]
[] [] []
LINKS:
- For further details on June 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)
