Actual (August): -0.4% mom; 1.8% yoy
Consensus: 0.1% mom; 2.2% yoy
Previous (July): 0.0% mom; 2.3% yoy
Fading recovery of the global economy led to lower prices of basic commodities. This is reflected in local PPI numbers. In the Czech Republic, producer prices dropped by 0.4%, far below market expectations, with the most significant negative contribution coming from prices of refinery products.
On the other hand, prices of agricultural producers jumped by 3.0%, month-on-month, and annual inflation sped up to 8.8% driven by higher wheat prices following global trend of rising prices of grains. There is a risk that food prices can shift inflation pattern in coming months.
Obviously, there are two opposite pressures: lower oil prices and higher food prices. Taking all together, inflation in consumer prices is likely to accelerate next year. Nevertheless, recent disappointing figures about economic activity abroad (ZEW in Germany) can result in stable CNB’s interest rates until 3Q 2011.