Consumer prices rose 0,9% m/m or 4.7% y/y.
Electricity prices drove CPI higher while the majority
of other prices decelerated
The CPI increased by 0.9% m/m in March, above our estimate and the market consensus. A hike in the price of electricity by 8.7 % had the biggest impact on the overall increase. In the ‘housing’ category, water and sewerage and
the imputed rent posted significant rises as well. As a result, housing prices surged 1.8% m/m, which accounted for
0.4 percentage point of the overall monthly increase in the
Transportation prices rose by 1.2% m/m on 2.4% m/m rise
in fuel prices, however, this increase can be considered
rather subdued. Clothing prices seasonally rose by 2.0%
m/m which was again a smaller increase than a year before.
Food prices were a positive surprise in March, as they
added only 0.3% m/m. Household equipment prices maintained their slow pace inching up 0.1% m/m.
In y/y terms, the inflation increased from 4.5% y/y in February to 4.7% in March. However, it was solely due to
regulated prices. The majority of the other prices continued
to decelerate. The core inflation declined from 4.9% y/y to
Given the currently declining oil prices, we expect the CPI
to fall back temporarily to 4.5% in April. Nevertheless, the
CPI should start to increase in the rest of the year, our estimate for December 2003 is 5.8% y/y.
The current inflation does not have much importance for
the central bank, who is focused on the exchange rate.
Therefore we do not expect any major market reaction.
The major relaxation of monetary conditions in January has
not been apparent on the price level so far.
Jakub Dvorak, Investment Research