Czech March industrial prices rise at fastest pace in almost six years.

By bne IntelliNews April 18, 2011
Industrial producer prices rose at their fastest annual rate since March 2005 increasing by 6.3% y/y in March 2011, up from 5.4% in the previous month, data from the statistics office showed. The growth was supported by a 25.8% y/y rise in the prices of coke and refined petroleum products and by a 13.8% rise in basic metals prices. Prices of food, beverages and tobacco rose by 5.9%, while transport equipment prices fell by 2.4%. The industrial prices growth might be expected to further speed up in the following months on the back of oil and gas prices which have already started to climb up and are expected to gradually gather pace. However, the faster increase of industrial prices will be hindered by the relatively weak world demand and unused capacities. The resumed growth in industrial producer prices rules out further interest rate cuts on part of the central bank, as their development suggests a moderate acceleration trend of the consumer price inflation. Agricultural producer prices grew for an eight consecutive month in March by 31% y/y, thus speeding up from a 29.7% y/y rise in February. Crop prices surged by 56.1% y/y - prices of cereals rose by 78.9% y/y, of oil plants by 60.2% y/y, of potatoes by 116.9% y/y, of fruits by 27.3% y/y. IntelliNews comment: Contrary to expectations, rising crude oil prices and poor harvest, together with producer price developments, pushed consumer prices slightly up in March, also due to still weak consumer demand. The inflation slowed down to 1.7% y/y in March from 1.8% in February. Nevertheless, the higher world grain prices, as a result of the weak harvest in Russia and Ukraine, will continue to influence the domestic market in the next months. The inflation, however, will be moderated by the still relatively subdued household consumption, which is to remain quite weak in view of the budget austerity measures, which leaves certain room for a delay of the central banks monetary tightening. Construction prices fell by 0.4% y/y in March, slightly higher than the 0.3% annual decline in February. The prices of market services increased by 0.5% y/y in March, moderately speeding up from a 0.3% y/y increase in February.

Czech March industrial prices rise at fastest pace in almost six years.

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