Vladimír Urbánek (Kurzy.cz)
Macroeconomics  |  9.4.2013 10:55:16

Comments - prices are unhurried, unemployment falls less than it should


Inflation hurry, it remains mild

Inflation in March remained very mild compared to February, and has not moved anywhere. Most recently, prices rose by 1.7%. The rise in prices is thus about three tenths of a percentage point lower than the long-term objective of the central bank. For low inflation spoken mostly very weak consumer demand. In other words, selling to stores, not more expensive. When prices customers go elsewhere. Significantly higher inflation this year is therefore confess. Its value should still be around two percent or less.

As in previous months, and in March, food prices are the main cause of inflation. Food and non-alcoholic drinks more expensive by 4% year on year, which means that participated in less than half the total inflation. Even if it is a high growth, so it is a positive message because food price inflation in recent months has decreased significantly. Back in November last year, the food more expensive by 5.9%, so 4% of the present value is positive. Yet food prices fall mainly on low-income groups, where food makes up a large portion of their monthly expenses. As a result, high prices mean ever-decreasing sales in this area. Food prices are not just a problem of the Czech Republic, the situation is quite similar in neighboring states. The Slovak food prices rose in February by 5.6%, or even more than in the Czech Republic.

But food inflation is compensated by a fall in prices in other areas. Prices are lower than last year, for example, in transport (-0.7%) and household equipment (-0.3%) or clothing (-3.4%). The automotive industry is again in crisis, and therefore car dealers competing to see who will offer a lower price. For consumers, it is indeed advantageous situation, but even in the last months is not a guarantee of success. Similarly, it is in electronics, where prices are falling long term. However, there is no reason consumer demand, but ever new innovations that reduce the prices of older models.

Unemployment fell less than it should

Unemployment in the Czech Republic in March dropped from 8.1% to 8.0%. This apparently positive report is entirely negative. The decline is not worth the very improvement in the labor market, but only a seasonal effect.He was also very subdued by bad weather in March, which did not support such farmers in the beginning of spring work.

The number of people out of work so far underperformed frontier 600,000 people, which closed in February. However, it is seen that the situation is not the best. Vacancies reported by labor offices less than 39,000 and that means 15 people in one place. Of this, 3,200 people were in retraining.

Slight fall in unemployment (about one tenth of a percentage point) caused by several factors that have joined forces. The first one was very bad weather in March, which hampered any seasonal work. Another impact is the tension between employers who do not pick up too. Their economic results it does not allow. Actual numbers of industrial production clearly shows that companies failing and four months in a row falling.Therefore, create new jobs, can afford only a very few companies.

Result in negative effects mitigated annual seasonal effect, the number of people out of work in March drops significantly. Last year at this time was out of work, only 7% of people. When unemployment reaches a value at least this year, it will be a success.

Ing. Michal Kozub
Analyst
Home Credit as

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