PRAGUE, April 15 (Reuters) - Czech industrial producer
prices fell 1.1 percent in March from February, and showed an
annual decline of 2.0 percent, from February's 0.6 percent drop.
The statistics bureau said agricultural producer prices rose
0.5 percent on the month, the first rise in nine months, but
showed a 28.6 percent year-on-year drop, accelerating from
February's 28.1 percent fall.
****************************************************************
KEY POINTS:
(change in percent) March Feb March forecast
PPI
month/month -1.1 0.3 0.3
year/year -2.0 -0.6 -0.7
(For full table of data........................[])
- The monthly decrease in the producer price index (PPI) was led
by a 3.5 percent drop in prices of refining products and coke.
- Metal prices and prices of metal products dipped 3.3 percent
on the month.
COMMENTARY
HELENA HORSKA, ECONOMIST, RAIFFEISENBANK
"Although the crown has been weakening since the end of last
year, it does not reflect in producer prices significantly.
"Recession is hammering the effect of the weak crown. The
global recession has squeezed prices of energy and commodities
deep below last year's levels.
"While producer prices fall, consumer inflation has been
resistant to pressure to drop. The central bank is likely to
wait with a rate cut."
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT, PRAGUE
"It is a pretty big surprise from the point of view of
expectations. The drop is across the board. It seems
manufacturing started to react to low demand, and it can mean
the beginning of some long-term price decline.
"If the number affects the Czech central bank's outlook for
consumer prices, it would open room for further monetary
easing."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"Higher than expected deflation of producer prices indicates
that also the recession might be deeper than we previously
thought. The main factor is the fall of metal prices, which
illustrates that metallurgy is one of the worst hit sectors.
"Overall this number shows, that recession is accompanied by
deflation and it definitely opens door to another rate cut."
JIRI SKOP, ANALYST, KOMERCNI BANKA
"It was surprisingly low. The major surprise was metals.
There is a low correlation to CPI, so I don't want to
overestimate this result.
"It is anti-inflationary, but the impact on monetary policy
decisions is low."
MARKET REACTION
The Czech crown <EURCZK=> was little changed after the data
at 26.73 to the euro.
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).
- March consumer inflation []
[]
- February industrial output figures []
[]
- Report on last Czech c.bank rate decision.......[]
[] [] []
LINKS:
- For further details on March 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 Jason Hovet)
