PRAGUE, June 9 (Reuters) - Czech consumer prices rose 0.5
percent in May from April, a tad above market expectations,
putting the annual inflation rate at 6.8 percent, flat from a
month earlier, data showed on Monday.
****************************************************************
KEY POINTS:
(pct change) May April May forecast
month/month 0.5 0.4 0.4
year/year 6.8 6.8 6.8
Details of May inflation data......................[]
Details of May jobless data........................[]
- Monthly price growth was driven mainly by the cost of fuel,
which rose by 3.9 percent. Diesel prices jumped 5.8 percent to
an all-time high and the most commonly used 95-octane gasoline
was at its most expensive level since October 2005.
- Food prices rose 0.7 percent month-on-month, mainly on
vegetable, fruit, and flour prices. Alcohol and tobacco prices
were up 0.3 percent.
- Housing, water, energy and fuels rose 0.3 percent on the
month.
COMMENTARY:
RAIFFEISENBANK RESEARCH NOTE:
"Rising prices of oil threaten also Czech inflation. Unless
the price of oil changes the direction, inflation in the Czech
Republic will remain close to the current level in the summer,
and will not slow gradually below 6.5 as we had expected.
Due to the risk of higher inflation in Europe and the U.S.
and related speculation on a possible rise of interest rates in
the euro zone but also in the Czech Republic, [] change in our
recommendation for Czech government bonds from buy to hold."
RADOMIR JAC, CHIEF ANALYST, PPF ASSET MANAGEMENT:
"Czech May inflation came in line with our expectation and
also close to the market view.
"The same sort of news is coming also form the unemployment
report, where the unemployment rate came slightly above the
expectation. To sum up, the data are positive for Czech bonds.
"Nevertheless, growing oil prices indicate that Czech CPI
may accelerate in June but we still expect Czech inflation close
to 5 percent by the year-end. Furthermore, sentiment in the
Czech bond market is under heavy impact of developments in the
Eurozone these days."
PETR DUFEK, ANALYST, CSOB:
"Year-on-year this was as expected, no surprise. The
month-on-month rise was caused mainly by food, fuels and
housing, as had been forecast. The CNB (central bank) should not
be surprised. For the following months, the picture is rather
negative. Inflation near the current level, slightly above the
central bank's forecast, and only near the end of the year (a
drop) toward 5 (percent)."
MARKET REACTION:
Crown firms to 24.665 to the euro <EURCZK=> from 24.690
ahead of the data, down from 24.615 late on Friday.
BACKGROUND:
- The central bank increased the key two-week repo rate by 25
basis points to 3.75 percent <CZCBIR=ECI> in February.
- Report on last Czech c.bank rate decision []
[] []
- The central bank (CNB) targets headline inflation which it
seeks to keep at 3 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 2.9 percent in first quarter of 2009 and 2.2 percent in the
third quarter. Consumer inflation net of impact of indirect tax
changes is seen at 2.4 percent in the first quarter of 2009 and
2.2 percent in third quarter.
LINKS:
- For further details on May 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 Jan Lopatka; Editing by Michael Winfrey)
