Data published by the Czech Statistical Office showed that Czech industrial producer price inflation slowed for the third consecutive month in July 2011 against market expectations for a slight rise. Prices rose by 5.4% YoY in July 2011 following an increase of 5.5% YoY in June 2011. On a monthly basis, price dropped 0.1% in July 2011.

Mr Jíři Škop analyst at Komerční banka said that "Czech producer prices in July declined slightly by 0.1% MoM which was marginally below our 0.0% and market +0.1% estimates. As expected, there was little change in the prices of refinery products, nor in food prices. The fall of industrial producer prices can be therefore accounted for a contraction in prices of chemical products and in the mining industry."

Mr Škop said that moreover, the data showed a drop in other sectors. In construction, there was a 0.1% MoM decrease and in agriculture, the fall amounted to even 2.3%. He added that "The construction sector is currently going through a tough period and, from this standpoint, its future isn’t looking very rosy either."

He said that "Building construction is suffering from an excessive supply of housing, whereas demand for these long term assets is weakened due to uncertainty about the future. Civil engineering also suffers a negative effect from fiscal consolidation, which translates into lower spending on infrastructure projects."

Separately, the ČSU announced that import prices rose 0.4% annually in June 2011, following a 2.1% gain in May. It was the weakest rate of increase since the index started rising in May 2010. Import prices fell 0.5 percent from the previous month.

Export prices declined 1.4% annually, down for a second month. In May 2011, export prices were down 0.1%. Export prices dropped 0.3%MoM.

(Sourced from www.ceskapozice.cz)