Development of consumer price indices - 2. quarter of 2004
Product Code: e-7132-04
Development of consumer price indices in the second quarter of 2004
The level of consumer prices increased in the second quarter of 2004 by 2.6% year-on-year , which is the biggest increase during the last two years (since the second quarter of 2002). The price development was influenced mainly by the following two factors: change of indirect taxes for part of services and goods, and an increase in prices of automotive fuel. As from 1 May the VAT increased from 5 to 19% for some services and, vice-versa, the VAT for most non-food goods decreased from 22 to 19%. The full impact of both the VAT changes on the year-on-year quarterly total increment of consumer prices was, according to unofficial calculation of the CZSO, an increase by 0.1 percentual point. The real influence was shown as an increase of prices primarily at catering and personal services; however, it did not reach the theoretical 13.3%. The VAT decrease was fully reflected primarily at prices of electricity, natural gas and public telecommunication services. The increase of price level was influenced also by a rise in prices of tobacco products, at which the excise tax increase started to be reflected only as from April.
The influence of the change of indirect taxes and other factors can be illustrated on the breakdown of the month-on-month increment of consumer prices in May, which was the highest except for January this year. The m-o-m increase of price level in May by 0.4% was caused by an increase of catering services by +0.3 percentual point, personal services by +0.1 percentual point, tobacco products +0.1 percentual point, automotive fuel +0.2 percentual point. Opposite was the influence of the decrease of prices of electricity and natural gas (-0.2 percentual point) and food and non-alcoholic beverages (-0.1 percentual point).
Market prices contributed to the total increment of consumer prices in the second quarter of 2004 by 1.5 percentual points and regulated prices by 1.1 percentual points. Market prices increased by 2.0% (from 1.5% in the first quarter) and regulated prices by +4.7% (from 5.2% in the first quarter).
Especially prices in the following divisions contributed to the acceleration of the y-o-y increase in the second quarter of 2004: restaurants and hotels, alcoholic beverages and tobacco, transport, recreation and culture, miscellaneous goods and services, while the influence of the two most important divisions as for weights – food and non-alcoholic beverages, housing – weakened.
Prices of food and non-alcoholic beverages recorded since May attenuation of the y-o-y increase mainly due to deceleration of price increase of meat, oils and fats, cheese, eggs. The y-o-y decrease deepened at prices of fruit of temperate climatic zone and fresh vegetables. A distinctive change occurred at prices of potatoes, which were in May by 56.6% higher than in the same period of the last year, while in June they were lower by 20.4%. Since potato prices were high already in the winter period, their usual price jump did not take place when consumers started to buy the early ones instead of late potatoes. In the second quarter, prices of bread and cereals increased y-o-y by +12.8% (of which prices of rolls and bagels increased by +32.4%), milk, cheese, eggs in average by +5.6%, oils and fats by +4.5%, potatoes by +20.3%, sugar by +11.9%. Lower prices were reported especially for fruit of temperate climatic zone (by –5.5%) and fresh vegetables (-11.9%). Development of consumer prices of food corresponded with the development of prices of agricultural producers, for which the year-on-year growth rate distinctively decelerated in May.
The y-o-y increase decelerated also at prices of housing , which were influenced by the decrease of natural gas prices since April by –3.4% and further decrease of the prices by –2.5% from May due to the VAT decrease. That led to the y-o-y decrease of the natural gas prices in the second quarter of 2004 by –5.1% (from +7.9% in the first quarter of 2004). As for electricity, the growth slowed down due to the lower VAT to +1.8% (from +3.5%). Growth of housing prices was influenced mainly by an increase of the cost of housing in cooperative dwellings and owner-occupied dwellings by +5.0%, an increase of prices of both the materials and services for the maintenance and repair of the dwelling by +5.3% and +5.9%, respectively, as well as prices of water supply and sewage collection by +5.1% and +5.4%, respectively, and refuse collection by +6.5%.
Development of transport prices was influenced mainly (despite the VAT decrease to 19%) by a distinctive increase of automotive fuel prices by +8.9% (in the first quarter decrease by –0.5%), which was caused by an increase of crude oil prices on the world markets. Prices of Natural 95 petrol (CZK/l 27.79) were in June the highest since September 2001; prices of diesel were the highest even since January 2001. Similar development (i.e. a change of a y-o-y decrease to growth) was recorded also for prices of domestic producers of refined petroleum products and import prices of mineral fuels and mineral oils.
In public catering , due to higher VAT, prices of meals in restaurants increased by +6.3%, prices of non-alcoholic beverages by +6.1% up to 8.7% and prices in canteens by +6.6%. The change of the excise tax on tobacco products, which took place in January, started to be reflected in an increase of cigarette prices by +4.7% in the second quarter. An increase of prices in the division recreation and culture was caused mainly by higher prices of recreational services by +5.7%, cultural services by +4.6%, newspapers and magazines by +5.0%; drop of prices of recreational stays attenuated, while prices for domestic recreational stays turned to grow. On the contrary, slight decrease of prices of equipment for the reception, recording and reproduction of sound and pictures continued. Price increase in the division miscellaneous goods and services was caused mainly by a price increase in personal services (+15.9%), insurance (+4.5%), financial services (+13.9%). A distinctive growth (although lower than in the first quarter) was recorded for prices in the division of communications , in which the VAT increased as from January for public telecommunication services from 5 to 22% and as from May 2004 it decreased to 19%. The drop of mobile phone prices continued.
Prices of goods, total increased by +1.2%, prices of services +5.1%. Growth of prices for services was influenced in the first quarter of 2004 mainly by an increase of prices for telecommunication services due to the higher VAT. A slow-down in the price development of goods was caused especially by the VAT decrease for electricity and natural gas as well as by lower growth of food prices. As for services, the price growth accelerated primarily due to higher VAT at catering and personal services.
Harmonized index of consumer prices in the EU25
The average year-on-year increment of the harmonized index of consumer prices for the EU25 reached in May 2.4%, which is by 0.4 percentual point more than in April. The highest price growth (+8.2%) was recorded in May in Slovakia, while in Finland prices were by 0.1% lower than the last year. Similarly, in the Czech Republic the year-on-year price growth accelerated from 2.0% in April to 2.6% in May.
