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INSTANT VIEW 4-Czech Aug PPI +0.4 pct month-on-month

12.09.2008 , Reuters

PRAGUE, Sept 12 (Reuters) - Czech industrial producer prices rose 0.4 percent in August from July, faster than market forecasts, putting the annual rate at a three-and-a-half-year high of 5.7 percent, from July's 5.2 percent.

The statistical bureau said agricultural producer prices dipped 9.8 percent in August on the month, for a 6.3 percent year-on-year increase, decelerating from July's 21.4 percent. **************************************************************** KEY POINTS: (change in percent) Aug July Aug forecast PPI month/month 0.4 0.1 0.0 year/year 5.7 5.2 5.3 (For full table of data........................[ID:nPRA002122]) - The annual figure was the highest since March, 2005. - The monthly growth in the producer price index (PPI) was led by a 3.1 percent rise in metal products prices, the highest growth rate since August 2004. - Food prices rose 0.4 percent on the month, while prices of coke and refinery products fell 6.1 percent.

COMMENTS:

MICHAL BROZKA, ANALYST, RAIFFEISENBANK "It's right to be surprised. The drop of oil prices was exceeded by the growth in metal prices... In the following months we expect a drop in producer prices to below 4 percent year-on-year.

"The fast slowdown in growth of agricultural prices was on the other side very positive."

MARTIN LOBOTKA, ANALYST, CESKA SPORITELNA

"It was to be expected... Despite some decline, oil prices kept relatively high."

"I think the central bank will wait for what happens with inflation at the end of the year."

"It is definitely not such a strong number that it would prompt the central bank to hike rates."

"If the economy shows some weakness, there could be an interest rate cut in November."

DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE

"While industrial prices grew faster than expected, agriculture prices fell sharply, so the overall picture is moderately positive."

"It changes the outlook for a steep decline in borrowing costs and we now expect only a gradual decline."

JAN VEJMELEK, HEAD OF ECONOMIC AND STRATEGY RESEARCH, KOMERCNI BANKA

"Agricultural prices recorded a significant drop and I think this is more important than PPI (producer prices).

"This is good news for consumer inflation as a whole. It shows that the peak in food prices is behind us, and the inflation outlook is really positive, meaning it will go down further and food prices are not inflation risks." 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). - August consumer inflation [ID:nL8630452] - July industrial output figures [ID:nPRA002118] - Report on last Czech c.bank rate decision [ID:nL74314]

[ID:nL7705441] [ID:nPRA002063] LINKS: - For further details on August 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 [CZ/INSTANT] - Overview of Czech macroeconomic indicators [CZ/ECI] - Key data releases in central Europe [CEE-CONVERGENCE-WATCH] - 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; Editing by Michael Winfrey)