PPI (Sep): -0.4 % m/m, -5.4 % y/y
Consensus: -0.2 % m/m, -5.2 % y/y
Previous (Aug): 0.2 % m/m, -5.2 % y/y
The September PPI came out in-line with our estimate and below the market consensus. Prices go down in all sectors except for mining and electric equipment. We expect the PPI to drop by 3.3 % in 2009. The deflation in producer prices is likely to last till 1Q 2010. However, the PPI is projected to grow by 1-2 pct in about one-year outlook, the key period for today’s monetary policy. We do not expect today figures to have a significant impact on monetary policy. Interest rates are seen stable but may be cut if the koruna firms too far.