PRAGUE, April 11 (Reuters) - Czech consumer prices rose by
a lower-than-expected 0.1 percent in March from February, and
the annual inflation rate was lower than market expectations at
1.7 percent, data showed on Monday.
The Czech statistics office said the monthly price rise was
mainly due to fuel prices and clothing and shoe prices, while
holiday and some food prices fell.
In its quarterly forecast, the central bank saw March annual
inflation at 1.9 percent. Analysts polled by Reuters had
predicted a 1.8 percent year on year rise.
The montly rise was also below analysts' estimates of 0.2
percent. The Czech crown <EURCZK=> weakened a touch to 24.410 to
the euro, from 24.392 before the data.
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Details of March inflation data.................[]
-- For more details, see below comments:
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ANALYST COMMENTS:
PETR DUFEK, CHIEF OF MACROECONOMIC RESEARCH, CSOB
"Compared with February, consumer prices rose only 0.1
percent, and that was mainly a result of rising fuel prices and
the arrival of new a new season of clothes in stores."
"On a year-on-year basis, inflation is a tenth of a percent
lower than in February at 1.7 percent. It therefore remains
below the central bank's target and below the actual prognosis
of the bank. The CNB therefore does not, from the standpoint of
inflation and contrary to the ECB, have a reason for quickly
raising interest rates."
"Inflation is still 1.7 percent, but is mainly a result of
more expensive energy and farming commodities on global markets.
It is decidedly not pushing Czech demand inflation higher. Many
consumer goods in the end became significantly cheaper on a
year-on-year basis mainly because demand has not recovered from
the economic crisis and it is also being slowed by fiscal
measures."
"Even in the coming months, we do not expect any serious
rise in prices on the Czech market."
RADOMIR JAC, CHIEF ANALYST, GENERALLI PPF ASSET MANAGEMENT
Moderation in Czech March annual inflation was driven mainly
by food prices, as expected. It is worth mentioning that food
prices decelerated their pace of growth in all three months of
the first quarter of 2011. There is no big surprise in the case
of automotive fuel prices and housing costs as well. At the same
time, prices of clothing and footwear showed stronger than
expected monthly increase, but in annual terms this item remains
deflationary."
"The Czech central bank is still facing mixed factors:
inflation is some 0.3 percentage points below its forecast, with
demand-side inflation pressures muted. At the same time,
however, data on Czech retail sales and unemployment delivered
positive surprises in the first quarter and there are clearly
pro-inflationary risks represented by external factors (growing
oil prices, ECB interest rate increases).
"We therefore think that chances for a CNB interest rate
increase in the second quarter are improving, despite the fact
that inflation is low at the moment. The central bank will have
at its disposal a new macro forecast at its May meeting, but in
our opinion it may wait with the first rate hike until its June
meeting in order to have full information about first quarter
GDP and its structure."
DAVID MAREK, CHIEF ECONOMIST, PATRIA FINANCE
"CPI came out as expected, there is no major surprise. It is
mainly driven by oil and rising commodity prices, as well as an
increase in some food prices."
"Inflation is developing in line with the expectations of
the central bank, maybe slightly slower. So it is nothing that
should speed up hiking interest rates."
"But the ECB has already increased its rate and real economy
data like industrial output and foreign trade and retail sales
have increased significantly in recent months. So despite benign
inflation, I would expect the bank to increase rates relatively
soon."
- The monthly price rise was mainly due to a 2.6 percent in fuel
prices, with unleaded fuel at a record high and diesel at its
highest level since July 2008.
- Monthly prices of clothing and shoes rose by 1.2 percent and
2.5 percent respectively.
- Monthly prices of domestic holiday packages dropped by 2.8
percent due to the end of the winter season.
- The year-on-year price growth was due to food prices, with a
12.0 percent rise in baked goods.
BACKGROUND:
- The central bank decreased the key two-week repo rate by 25
basis points to 0.75 percent <CZCBIR=ECI> on May 6.
- Report on last Czech c.bank rate decision......[]
[] [] []
- The central bank (CNB) targets headline inflation, which it
seeks to keep at 2 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 2.0 percent in first quarter of 2012 and 2.1 percent in the
second quarter of 2012.
LINKS:
- For further details on March 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>
