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3/9/2016, 1:15 PM (Source: TeleTrader)
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Czech inflation slows to 0.5% in February, stock market cautios

Stock market in Prague were trading with modest losses on Wednesday after the official statistics office rolled out data on prices movements, with inflation rate slowing down to 0.5%.

The rate of annual inflation was 0.5% in February, slowing down from 0.6% in January, according to data by the Czech Statistical Office (ČSU) released on Wednesday.

There was a slowdown in the price growth for alcoholic beverages and tobacco, and in housing, water, electricity, gas and other fuels categories. Prices rose 0.1 month-on-month, but holiday packages were significantly higher for a month, up 8.3%. The trend was followed by 7.6% higher prices for footwear, while garments prices were up just 1.0%.

Looking on a month-to-month perspective, food prices were on the rise in the second month of 2016: vegetables and chocolate prices rose over 3.5%. Holiday arrangements were 5.0% more expensive than in February a year ago. Transportation costs fell, and the slide in oil prices continued for the seventh month in a row, ending down 3.9% in February.

The Czech National Bank said in written statement that the annual inflation rate of 0.5% is below its target and "well below the lower boundary of the tolerance band around the target."

Core inflation remains above 1%, reflecting the effect of the growing domestic economy and rising wage growth, with food prices rising markedly slower than expected.

"According to the forecast, annual headline inflation will gradually increase, hitting the 2% target at the monetary policy horizon (i.e. in the first half of next year) and then moving slightly above it. (…) At the same time, the anti-inflationary effect of import prices, which are currently falling sharply due to a fall in producer prices in the euro area and global oil prices, will fade gradually," said the statement signed by Tomáš Holub, the executive director of Monetary Department at the central bank.

The Prague Stocks Exchange's main PX index edged down 0.07% to 891 points at 1:14 p.m. CET. The commodities company NWR plunged 9.09%, while the media corporation CETV, a part of CME, saw another day of losses, sliding 2.15%. Financials were the prominent advancers: Erste Group added 0.59%, Vienna Insurance Group ticked up 0.16%, while casino operator Fortuna won 0,70%.

The PX Total Return index slid 0,06%.

The Czech koruna evened yesterday's rise, and was 0.01% weaker to the euro at 1:14 p.m. CET, the main counterpart, after Czech national bank intervened to slow appreciation of the currency.

Image: Česká národní banka

Breaking the News / ZR