Consumer price indices - inflation - August 2006

The consumer price level rose by 0.2% month-on-month in August. Similarly as in the preceding years, the month-on-month growth was influenced by a seasonal increase in prices of domestic recreational stays and recreational stays abroad. In terms of year-on-year comparison, the growth of consumer prices accelerated to 3.1% in August from 2.9% in July.
The month-on-month rise in the price level was brought about mainly by an increase in prices in ‘recreation and culture’, in which, like in the previous years, prices of package holidays rose by 10.3% due to the peak season. In ‘health’, prices of drugs and amounts paid for drugs by patients increased by 3.9% in average. In ‘communications’, the moderate growth of prices was due to discounted prices for installation of a residential telephone line in the previous months, which came to an end. In ‘transport, prices of automotive fuel went up by 0.7%.

A reducing effect had the fall in prices in ‘food and non-alcoholic beverages’, which was partly brought about by the drop in prices of chocolate and chocolate products, coffee, tea and some other food (due to a shift to the lower 5% VAT rate). The impact of this change on month-on-month total increase represented a reduction by 0.16 percentage points according to the CZSO preliminary calculation. Prices of potatoes, fresh vegetables and fruit were also lower (by -10.9%, -6.7% and -1.7%, respectively). Although in a slower rate, the growth of prices of bread and cereals (+1.2%) continued in August, of which bread by 1.4% and rolls and baguettes by 2.0%. In ‘clothing and footwear‘, prices of both cloth and footwear dropped (-0.4% and -1.0%, respectively) mainly due to lower prices of summer assortment.

In total, prices of goods dropped by -0.3% and prices of services rose by 0.8%.

In terms of year-on-year comparison, consumer prices amounted to 3.1% in August (0.2 percentage points up on July). In connection to the m-o-m development, acceleration in y-o-y price growth was observed mainly in ‘recreation and culture’, ‘health’ and ‘communications’. In ‘health’, prices of medicaments increased by 7.8% and in ‘communications’, prices of public telecommunication services by 2.7%. The y-o-y rise in prices in ‘food and non-alcoholic beverages’ accelerated slightly due to the increase in prices of bread and cereals by 13.7% (from 12.2% in June). Prices of bread were higher by 20.1% and rolls and baguettes by 29.4%. An acceleration of the price growth rate was recorded for prices of potatoes and fruit of the moderate climatic zone, which were higher (by 68.8% and 20.5%, respectively) in August. Lower than in the previous year were predominantly prices of poultry, tropical fruit, chocolate and chocolate products, cocoa, coffee and tea.

The decisive influence (1.9 percentage points) on y-o-y rise in consumer prices belonged again to price changes in ‘housing, water, electricity, gas and other fuels’, in which prices of natural gas were higher by 24.6%, electricity by 9.0%, heat by 12.1%. The second biggest effect had the price development in ‘food and non-alcoholic beverages’ (0.5 percentage points).

A reduction in the price level was affected, like in the previous months, primarily by the drop in prices in ‘clothing and footwear‘ and in ‘furnishings, household equipment and routine maintenance of the house‘.

In total, prices of goods went up (2.9%) as well as prices of services (3.6%).

Inflation rate, i.e. an increase in the average consumer price index for last 12 months related to the average CPI for the preceding 12 months stood at 2.7% in August, i.e. by 0.1 percentage point up on July 2006.

According to preliminary data of Eurostat, the year-on-year increase in the average harmonized index of consumer prices (HICP) in the EU25 was 2.4% in July (the same as in the previous two months). Prices grew mostly in Latvia (6.9%), the least in Poland and Finland (both 1.4%). Growth of prices in Slovakia accelerated to 5.0% in July (from 4.5% in June). In Germany, the price growth was 2.1% (2.0% in June).

In the Czech Republic, the m-o-m increase was 0.2% in August and the y-o-y HICP growth speeded up to 2.6% (from 2.4% in July). According to the flash estimate published by Eurostat, the y-o-y HICP increase for the Euro-zone was 2.3% in August 2006.

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Note
Contact: Marie Huskova, phone (+420) 274054104, e-mail: marie.huskova@csu.gov.cz
Data source: CZSO survey
End of data collection: 20th day of the reference month
End of data processing: 3rd day of the month that follows the reference month
Related publications: 7101-05 Consumer Price Indices – Basic Information
7103-05 Consumer Price Indices – Detailed Information
( http://www.czso.cz/eng/csu.nsf/archivri?openform )
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