PRAGUE, Oct 15 (Reuters) - Czech industrial producer prices
dropped by bigger-than-expected 0.4 percent in September from
August, showing an annual decline of 5.4 percent, data showed on
Thursday.
This was below expectations of 0.2 percent month-on-month,
fall, and the year-on-year drop was the biggest since records
started in 1991.
In August, producer prices dropped 5.1 percent year on year.
The statistics bureau said agricultural producer prices
slumped 3.3 percent on the month, and showed a 21.2 percent
year-on-year drop, a slowdown from a 23.5 percent fall in
August.
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KEY POINTS:
(change in percent) Sept Aug Sept forecast
PPI
month/month -0.4 0.2 -0.2
year/year -5.4 -5.1 -5.2
(For full table of data........................[])
- The monthly producer price index (PPI) returns to negative
territory after a small rise in August.
- Prices of coke and refinery products dipped 1.5 percent from
August.
- Prices of chemicals and chemical products dropped 4.7 percent.
- Prices of natural resources rose 2.1 percent and prices of
electrical equipment edged 0.6 percent up.
- In farm prices, measured separately from the industrial index,
potato prices dropped 12.4 percent month-on-month, and fruit
prices slumped 16.7 percent. Grain prices fell 4.8 percent.
- Construction prices dipped 0.2 percent on the months and rose
0.2 percent year-on-year.
- Prices in the service sector rose 1 percent on the months due
to a rise in advertising prices.
MARKET REACTION:
The Czech crown <EURCZK=> was little moved after the data,
inching down to 25.902 to the euro from 25.895 before the news.
COMMENTARY:
HELENA HORSKA, ANALYST, RAIFFEISENBANK:
"Deflation reached its peak... This is an unprecedented drop
in producer prices in Czech history. The drop is caused by
strong crown, cheaper resources and the pressure of weak demand.
"But due to low comparative base, producer prices will not
fall further. On the top of that, the crown has stopped firming.
"This news is slightly negative because it supports
speculation the central bank may cut rates."
JIRI SKOP, ANALYST, KOMERCNI BANKA:
"From the central bank's point of view, this is another
anti-inflationary figure and it supports our view that the
central bank will cut rates to 1.0 percent at its November
meeting."
PETR DUFEK, ANALYST, CSOB:
"This is another set of figures speaking in favour of a
central bank rate cut. Inflation is nowhere on the horizon, with
prices in production, be it industrial or farming, falling fast.
Part of the PPI drop is attributable to cheaper oil, but we
can see more and more that producers are reacting to low demand
by price cuts.
"The central bank got another argument in favour of rate
cuts and then a long period of stability of rates at record low
level."
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).
- September consumer inflation []
[]
- August industrial output figures []
[]
- Report on last Czech c.bank rate decision.......[]
[] [] []
LINKS:
- For further details on September 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 Jan Lopatka)
