Czech Producer Price Rise Highest Since 1992

Published: 08.12.2021 Related countries:  Sweden Sweden

Industriall Producer prices continue to rise in the Czech Republic, and producer prices indicate even future development, which is not very favorable for the economy.

In October Industrial producer prices in the Czech Republic rose by 11.6 percent year on year in October, accelerating growth from 9.9 percent in September. This was their most significant growth since January 1992. Rising prices also accelerated for other manufacturers. In agriculture, prices were higher by 14.1 percent compared to last October, in construction by 7.5 percent and prices of market services for enterprises rose by 1.9 percent year on year. The Czech Statistical Office (CSO) informed about it today on its website. Producer prices indicate future consumer price developments. According to analysts, data on production inflation are an argument for the CNB to further increase rates. In a month-on-month comparison, industrial producer prices rose by 1.9 percent in October, the fastest growth rate since January 2008. Agricultural producer prices also rose by 1.9 percent and construction work rose by 0.9 percent compared to September. Prices of market services for companies increased by half a percent month-on-month in October. Year-on-year industrial producer prices have been rising since February, with growth still accelerating. As in previous months, prices in the coke and refined petroleum products sector rose in October. Prices of base metals and fabricated metal products were up by 26.9 percent year-on-year, chemicals and products by more than 44 percent, and wood, paper and printing by almost a quarter. Prices of food products, beverages and tobacco rose by 2.8 percent in October compared to last year. On the other hand, the prices of means of transport fell by 2.9 percent, due to cheaper parts and accessories for motor vehicles. On the other hand, the vehicles themselves rose by 2.2 percent year on year. The rise in prices of agricultural producers accelerated year-on-year to 14.1 from 9.5 percent in September. It became more expensive in crop production than in animal production. The price of oilseeds rose by about a quarter, cereals rose by 22.6 percent and fresh vegetables rose by more than 11 percent. Milk prices rose by 8.8 percent and cattle by 7.3 percent. Fruit became cheaper and the prices of pigs for slaughter fell year-on-year. According to the CZSO’s estimate, construction work prices increased by 7.5 percent compared to last October, while in September they increased by 6.6 percent. Prices of materials and products consumed in construction were up by 16.8 percent year-on-year in October. Market services for companies also recorded a higher rate of price growth, with year-on-year price increases accelerating to 1.9 percent from 1.6 percent in September. Prices for employment services rose by more than a tenth. Prices for advertising services and market research rose by 5.6 percent year on year. Land transport services were 2.3 percent higher. The year-on-year decrease of 1.7 percent was recorded by statisticians in information services. Analysts: Production inflation data is an argument for the CNB for further rate increases According to analysts contacted by ČTK, today’s data on industrial producer prices for October are an argument for further raising interest rates. They thus expect the key interest rate to rise to more than three percent in December. In addition, the development of energy prices, according to economists, indicates a further rise in industrial prices. “Inflationary pressures from the manufacturing sector are thus intensifying, which foreshadows further acceleration in consumer inflation. An important factor in producer prices is energy prices, which have started to rise significantly since the end of the summer. Jakub Seidler. According to Radomír Jáč, chief economist at Generali Investments CEE, the development of producer prices is an argument for further increases in interest rates by the Czech National Bank. It last raised the key interest rate by 1.25 percentage points to 2.75 percent in early November. “The rest of this year and the first months of 2022, however, will be marked by a continuing rise in price pressures in the domestic economy,” Jáč added. “New data on producer prices prove that the Czech National Bank’s decision on a jump in interest rates was correct. We have reached a situation where inflation has become the biggest threat to our economy,” said BHS chief economist Štěpán Křeček. Also, according to Komerční banka economist Martin Gürtler, today’s data will only confirm that the central bank should continue to raise interest rates. “You will probably get over three percent at the December meeting,” he said. The material was brought up by employees of CzechTrade Scandinavia. Using the source: William Malcolm, Prague Business Journal Photo: Prague Business Journal + Archiv CzechTrade