Development of consumer price indices - 2. quarter of 2005
Product Code: e-7132-05
Development of consumer price indices in the second quarter of 2005
Consumer prices increased in the second quarter the same as in the first quarter of 2005 by +1.6%. While in the first quarter the year-on-year increase of consumer prices was balanced during all the three months, in the second quarter it saw rather big fluctuations both downwards (May) and upwards (June). Slowing down of the price increase in May was a reflection of the VAT increase for services from 5% to 19% from May 2004. As a result of that, prices of services burdened by different VAT were levelled off year-on-year until April 2005 and since May 2005 this difference in VAT has no longer any influence. A major acceleration of year-on-year growth of prices in June was caused primarily by prices of public telecommunication services or changes in lump fees for operation of residential telephone lines (cancellation of free credits within telephone charges). In the second quarter of 2005, market prices increased by +0.6% and regulated prices by +4.5%. Share of market prices in the overall increase of price level in the second quarter of 2005 was 0.5 percentage points and regulated prices 1.1 percentage points.
In most COICOP divisions of the consumer basket price level remained similar to that of the first quarter. Acceleration of year-on-year growth was reflected especially in “housing, water, electricity, gas and other fuels” (hereinafter housing) and post and telecommunications (communications).
Acceleration of price growth in housing was influenced mainly by natural gas and electricity prices, which increased +4.0% for electricity (from 2.3% in the first quarter) and +9.0% (from 6.0% in the first quarter of 2005) for natural gas. For both, VAT decrease in May 2004 from 22% to 19% showed its influence as it decreased the price development until April 2005. For natural gas, prices decreased month-on-month (-2.3%) from April 2005; however, it was lower than in April 2004 and thus it resulted in acceleration of year-on-year price growth. Development of prices for housing was influenced also by an increase of prices of water supply +4.5%, sewage collection +6.0% and refuse collection +10.2%.
The biggest price jump occurred in communications , in which prices of public telecommunication services turned from the decrease by –2.3% in the first quarter of 2005 into the price growth of +3.7%. This development was influenced mainly by the price increase of public telecommunication services by +15.0% in June. Prices of postal services were due to an increase of postal charges from February 2005 higher by +15.5% year-on-year.
Prices of food and non-alcoholic beverages remained slightly lower than in the second quarter of 2004, although in May and June their level got for the first time in 2005 above the level of the corresponding months of 2004. This development was influenced mainly by seasonal kinds of food, the price decrease of which slackened and thus its lowering effect on the price level of food decreased, too. It applied especially to potato prices, which increased month-on-month in relation to purchases of new potatoes instead of old in June +89.7% (+2.6% in 2004). Despite that, potato prices remained in average by 45.0% lower in the second quarter of 2005 than in 2004, of which in June by 20.6%. Lower than last year were also prices of fresh vegetables –6.9%, bread and cereals –2.6% (of which wheat flour –13.9%), non-alcoholic beverages –1.9%. On the other hand, prices of sugar increased +22.1% and tropical fruit +6.9%. Prices of meat increased +2.4%, of which pork meat +2.5%, beef +6.6%, while poultry decreased –1.2%.
Fall of prices of agricultural producers slackened in May; import prices of food industry products signalised this trend already in April. Prices of industrial producers of food products and beverages, on the other hand, got in May for the first time in 2005 under the level of the corresponding month of 2004.
Price decrease slackened also in transport thanks to automotive fuels, in particular, the prices of which increased in the second quarter of 2005 by +3.3% year-on-year (of which prices of diesel +10.9%), while in the first quarter of 2005 they were by 0.7% lower. The biggest price increase occurred in April (+6.1%), the least in May (+1.1%). Price growth slowed down in May also for world prices of BRENT crude oil and prices of domestic producers of refined petroleum products. Prices of transport services increased by +1.8%. Prices of cars, motorcycles and bicycles were lower than in 2004.
Lower price growth than in the first quarter was especially for prices in alcoholic beverages, tobacco; restaurants and canteens; miscellaneous goods and services . In all the three COICOP divisions, the slowdown of the price growth in the second quarter of 2005 was influenced by taxes that were introduced in 2004. For tobacco products it related to an increase of excise tax from January 2004 (it made cigarettes more expensive on the market as from May 2004, because they were sold from the stock for old prices). In public catering and personal services (included in miscellaneous goods and services) the VAT increased from 5% to 19% from May 2004. Due to elimination of the influence of higher taxes in May 2005, year-on-year growth of prices of meals in restaurants slowed down in the second quarter to 4.0% (from 7.3% in the first quarter of 2005), in canteens to 7.6% (from 12.4%) and personal services to 5.2% (from 10.0% in the first quarter of 2005).
Prices of goods in total increased by +0.3% and prices of services +3.7%.
Average year-on-year increment of harmonized index of consumer prices (HICP) in the 25 EU Member States reached 2.1% in April and according to preliminary data 1.9% in May . In the Czech Republic, the lowest HICP price growth this year was in May (+0.9%) and in June it accelerated to 1.5%. In Slovakia, prices increased in April and May by +2.5% and 2.3%, respectively. The fastest price growth in May was in Latvia (+6.5%), while the lowest growth of prices was in Sweden (+0.2%).
