Development of consumer price indices - 1. quarter of 2005
Product Code: e-7132-05
Development of consumer price indices in the first quarter of 2005
Month-on-month analysis
Development of consumer prices in the first quarter of 2005 was influenced by a different month-on-month increment of prices in January 2005 and January 2004; this year it was markedly lower (0.7%) than last year (1.8%). Unlike January 2004, this year no increase of indirect taxes took place; on the contrary, VAT rate was decreased for recreational services from 19% to 5%. Prices regulated by administrative changes increased in January by 1.7% and market prices by 0.3%. In the following two months, the growth of both regulated and market prices slowed down and even stopped. As for regulated prices, in January especially the following prices increased: electricity +4.9%, natural gas +1.4%, heat +2.6%, water rate +3.6% and sewage collection charges +4.7%. Growth of market prices was influenced mainly by prices of holidays (winter season), newspapers and magazines, and financial services. The following had a decreasing influence on the level of market prices during all months: prices of clothing and footwear, furnishings, household equipment.
Year-on-year analysis
Consumer prices increased in the first quarter of 2005 by 1.6%, which is in comparison with the fourth quarter of 2004 a noticeable deceleration of price growth (by 1.5 percentage point). This development was a consequence of the difference of month-on-month increments of consumer prices in January 2005 and January 2004. Deceleration of price growth was observed for both market and regulated prices. Market prices increased by 0.6% (+1.8% in the fourth quarter of 2004); growth of regulated prices slowed down to 4.7% (from 7.1% in the fourth quarter of 2004).
Deceleration of price growth in the first quarter of 2005 occurred in most COICOP divisions of the consumer basket, of which for three of them – ‘food and non-alcoholic beverages’, ‘transport‘, ‘communications‘ – the trend turned from growth to decrease.
Prices of ‘ food and non-alcoholic beverages ‘ underwent a year-on-year decrease last time in the third quarter of 2003. Their development in the first quarter of 2005 was influenced mainly by a decrease of prices of seasonal kinds of food, namely lower prices of potatoes by 57.1%, fresh vegetables by 8.8%, fruit of temperate climatic zone by 11.7%. Lower than last year were also prices of bread and cereals, non-alcoholic beverages. On the contrary, much higher were prices of sugar (+ 26.4%) and tropical fruit (+10.1%). Prices of meat increased by 2.2%, of which pork meat by 6.9%, beef by 5.1%, while prices of poultry decreased by 3.0%.
Development of consumer prices of food corresponded to the development of agricultural producer prices, which were from January 2005 lower than last year. The price fall applied especially to crop products, while prices of livestock products increased. Import prices of products of food industry recorded a year-on-year decrease already in November 2004, which even deepened in the following months. Prices of industrial producers of food products and beverages decelerated in January and February 2005 their year-on-year growth, however, they did not get under the level of the corresponding months of 2004.
Price development changed also in ‘ transport ‘, in which automotive fuel prices were in the first quarter of 2005 lower by 0.7% year-on-year, while in the fourth quarter of 2004 they increased by 12.3%. Price decrease of automotive fuel as a whole was influenced by lower prices of petrol. On the contrary, prices of diesel and LPG natural gas remained higher by 6.1% and 14.4%. Year-on-year development of crude oil world prices as well as prices of domestic producers of refined petroleum products (as it results from the data for January and February) did not face a similar fall, even though as for domestic producers of refined petroleum products the year-on-year growth of prices decelerated. Year-on-year development of consumer prices of automotive fuel in 2004 was influenced (besides prices of crude oil and refined petroleum products) also by excise tax increase as from January 2004. This difference in excise taxes stopped to have an influence since January 2005. Also prices of new and second-hand passenger cars decreased.
The biggest fall was observed for prices of ‘ communications ‘, in which prices of public telecommunication services turned from the growth by 14.6% in the fourth quarter of 2004 to decrease by 2.3% in the first quarter of 2005. This development was caused by the different VAT rate in the first quarter of 2004 (22%) and in the first quarter of 2005 (19%). On the contrary, prices of postal services were higher by 10.4% year-on-year due to an increase of postal charges as from February 2005.
Deceleration of price growth in ‘ housing, water, electricity, gas and other fuels ‘ was caused mainly by a deceleration of price growth of natural gas to 6.0% (from 7.7% in the fourth quarter of 2004) as a result of a more moderate price increase of natural gas in January 2005 than in January 2004. Electricity prices increased by 2.3%. Development of prices of housing was influenced also by an increase of the cost of housing in cooperative dwellings by 3.3% (from 5.6% in the fourth quarter), water rate by 4.3%, sewage collection charges by 5.7%, and refuse collection by 9.8%.
In ‘ health ‘, prices of medicaments increased by 10.2%, as they reflected an increase of supplementary payments for medicaments prescribed by doctor.
In ‘ recreation and culture ‘, prices of package holidays increased by 4.9% (from 3.0% in the fourth quarter of 2004) due to an increase of seasonal prices of domestic recreational stays and recreational stays abroad in the mountains in January and February. Price decrease of equipment for the reception, recording and reproduction of sound and pictures continued.
Similarly, in ‘ restaurants and hotels ‘, food prices in restaurants increased by 7.3% and food prices in canteens by 12.4% (especially as a result of higher VAT introduced in May 2004).
In ‘ miscellaneous goods and services ‘, prices grew mainly due to an increase of personal care services by 10.0% and financial services by 10.5%. Prices of insurance decreased by 2.1% in average especially thanks to a decrease of motor cars insurance prices.
Prices of goods in total increased by 0.1% and prices of services by 4.2%.
HICP EU25
Average year-on-year increment of harmonized index of consumer prices (HICP) in the 25 EU Member States reached according to preliminary data 2.0% in January and 2.1% in February . In the Czech Republic, the growth decelerated to 1.5% in January (from 2.5% in December) and thus fell under the average consumer price level for the EU25.
