Producer prices grew by faster-than-expected 0.6% in June, and brought the annual producer price inflation to 5.1%, level similar to early 1996 or 1998. As usual, prices grew fastest in oil-related industries (crude-oil processing prices jumped by 7.5% in June only). Elsewhere, the growth was modest (food industry 0.4%, metal industry 0.6%, mining +0.4%). The number increased the annual PPI index to 5.1%, highest level since mid 1998. More may be in the pipeline, as agriculture prices jumped by 15.9% y-to-y in June, almost eliminating last year's fall by 20%. On the other hand, oil price impact will begin to fade away in the second half of 2000, as oil prices will cease to grow beyond their current 30 USD/barrel level. We estimate that by the end of 2000, PPI will slowly decline to 4.6% y-to-y, level still higher than our previous analysis indicated.
(Ondrej Schneider)