Industrial prices increased by 1.2%, month-to-month, 5.9%, year-on-year (Patria Finance forecast: 1.1%, m-to-m, 5.9%, y-to-y). On a year-on-year basis, October prices of construction work rose by 4.4%, of agricultural producers by 11.5%, and of market services by 5.0%.
The month-to-month increase in industrial producer prices was primarily contributed to by electricity prices. A switch to winter tariffs for electricity prices brought an increase of these prices by 15.2% and contributed to the 1.2% PPI increase by 0.9%. The rest of the PPI growth can be ascribed to price changes in manufacturing. Both, prices in food processing and prices in chemical and pharmaceutical industry rose by 0.7%. Behind an increase of prices in the first of them we can see a growth of agricultural prices. The second one was influenced by a development of oil prices on the world markets in 1999 and 2000. However, a situation on the oil markets has stabilised recently that enabled price in oil refineries to fell by 1.2% in October. As for retail prices of fuels, an impact of the wholesale prices change should be unnoticeable. On the other hand, the increase of food processing prices could lead to higher retail food prices, as a stronger pre-Christmas demand and every-year January price adjustment would enable to set higher prices.
Taking together CPI and PPI figures we still keep our estimate that the first rate hike will come in the second quarter of 2001.
At the end of 2000 we expect PPI, y-to-y, on the level of 5.6%.