Vladimír Urbánek (Kurzy.cz)
Macroeconomics  |  December 10, 2012 10:59:25

Comments on the November inflation - for the first time below 3%


iPoint.cz Consumer price index in November fell by 0.2 percent and helped the mainly cheaper fuel, post-season recreation discounts and rebates mobile operators. On the contrary, inflation continued growth contributed food prices. Annual inflation slowed from 3.4 to 2.7 percent. Deflation measured indicator of core inflation began to deepen again.

The main word in the November inflation should fuel prices, which on average cheaper by 3.7 percent. Price of gasoline with an octane number of 95 has dropped to levels that were reached in the beginning of summer, before the recent significant increase of prices. Ephemeral life of this latest wave of more expensive gasoline shows how useless has been discussion about reducing the excise tax on fuel.

To disinflation (low inflation) also contributed mobile operators. Discounts on their services reduced price of telephone services by 2.6 percent. While looking at the bill calls, sms and internet seem, after all in this area the ice slowly melting. Previous year, prices of telecommunications and postal services dropped by 5.2 percent in the last five years, then a total of 13.7 percent.

The decline in prices of 0.8 percent recreation is at this time of the year between summer and winter season and the usual scope is out of step with the values ??observed in previous years.

Food prices are already rising three months, this time by 0.3 percent. Most significantly contributed to the increase in prices of potatoes, seasonal vegetables, butter and bread.

Headline inflation for the first time fell below the three percent limit. Downward trend should continue in the coming months, despite the increase in VAT rates by two percentage points above (namely the impact of this change will be weaker this year than offset the reduced VAT rate from 10 to 14 percent). Throughout the next year, inflation should be between 2-3 percent.

Core inflation, which does not affect tax changes or fluctuations in the price of food and fuel is already 42 months is negative. In addition, deflation began to deepen again.This fact together with a deeper recession, which is likely to take longer than expected, increasing pressure on the central bank to further relax monetary conditions. Given that interest rates are at zero, it means increasing pressure on the use of foreign exchange interventions.

 

David Marek, Patria Finance

iPoint.czAnnual inflation in November finally dropped. Throughout this year, inflation remained well above three percent. In October, still at 3.4% in November dropped significantly to 2.7%. The decrease is mainly attributable to higher comparison base from last year, which helped to make the November inflation rate dropped. Last year, more expensive stores during November and December to prepare for the growth of VAT. This year, however, the situation around the value added tax is uncertain and, therefore, can not even estimate how inflation will evolve in the coming year.

The most significant driver of inflation in food prices this year, which in November rose by 5.9%. For high food prices are the three main factors. The first is the higher VAT, which applies throughout the year.The second effect of the import prices of foreign, which also grow. It is the long-term situation in food markets. The last factor is the relative crop failure this year if the harvest results compare to last year. Last year was well above average, and therefore the standard of this year's crop seems at first sight difficult.

However, long-term decline, especially prices of non-food goods. It is a clothing and footwear that is cheaper year by 3.5%. Even though people prefer these goods are waiting for discounts and looking even better prices. The same applies to home furnishings, whose prices fall by 0.4%. Significantly slower growth and helped to fuel prices, which had an impact on the entire transport sector. This is not a real reduction in prices at the petrol pumps, but an annual difference in prices.Last year at this time are significantly increased prices at the pump, and so inflation is now declining slightly. The last area where prices fall significantly, then the post and telecommunications, where prices fell by 5.2%.


Ing. Michal Kozub

Analyst

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