Czech PPI drops for second straight month in Feb 2014 on utilities.

By bne IntelliNews March 17, 2014

Lower energy and mining costs pushed the Czech industrial producer price index down by 0.7% y/y for the second straight month in February 2014, data from the statistics office showed. The market was expecting a 0.6% annual drop for February.

Manufacturing producer charges, which have the strongest weight in the index, increased by 1.2% y/y in February, slightly faster than January’s rise of 1.1% y/y helped by a stronger growth in food and transport equipment prices.

Prices of electricity, gas, steam and air conditioning declined 8.8% y/y in February, the same as the month before, while water supply charges grew by 3.4%, also the same as in January. Mining and quarrying continued to fall deepening their annual decline to 3.1% from 3%.

In monthly terms, industrial producer prices in the country stayed flat in February, following a 1.3% drop in January.

Agricultural producer prices fell for the seventh month in a row in February going down by 5%, after a 4% decline in the previous month. The decline came as crop prices shrank by 15.2%, while the growth in animal products prices eased to 7.7% from 8.1%. On a monthly basis, agricultural prices edged up by 0.2%, much weaker than the 2.6% rise registered in January.

Construction work prices inched down by 0.4% on the year but were flat on the month in February, whereas prices of market services fell by 1% on an annual basis but were 0.7% higher on the month.

The PPI inflation in the Czech Republic eased to 0.8% in 2013 from 2.1% in 2012. The February data indicates that the consumer price inflation, which stayed at more than a four-year low of 0.2% in the first two months of 2014 will remain muted in the following months. The Czech central bank has said that the threat of deflation has probably been averted thanks to the easing of the monetary conditions via the forex interventions. Inflation should return to the bank’s 2% target at the end of the year.

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