Development of consumer price indices - 2. quarter of 2007

Consumer prices increased in Q2 2007 by 1.4% compared with Q1 2007. This increase came especially from a 3.0% growth of regulated prices while market prices rose by 1.0 %.

The growth of regulated prices was attributed predominantly to a 8.0 % price increase of tobacco products caused by the delayed effect of the excise tax increase in April 2006 followed by additional increase in March 2007. In the division ‘health' the amounts paid by patients for drugs with prescription increased by 10.7% and seasonal prices of package holiday by 7.4%. In 'housing, water, electricity and other fuels’ (hereinafter only ’housing’) the natural gas prices increased by 1.4% and prices of heat and hot water by 1.2%. Net rentals rose by 1.4 % of which in dwellings with regulated rentals by 2.5 %. In ‘miscellaneous goods and services’ the fees for social care rose by 3.7 %.

The movements of market prices were affected mainly by a 9.1% increase in the price of fuel. In ‘clothing and footwear’ the price growth was attributed mainly to seasonal models of clothes and shoes. In ’food and non-alcoholic beverages’ the main increase was recorded for seasonal prices of fruit, vegetables incl. potatoes and bread and cereals (by 3.5%, 5.5% and by 2.5%, respectively). The drop of market prices was caused especially by falling prices of 'household appliances', 'transport equipment' and equipment for the reception, recording and reproduction of sound and pictures, photographic and cinematographic equipment and personal computers. In 'food and non-alcoholic beverages' slightly lower were prices of oils and fats, pork, eggs and tea.

In relation to individual divisions of consumer basket the significant upward trend was recorded for the division ‘alcoholic beverages and tobacco’, downward trend was shown in prices of 'recreation and culture'.

The average m-o-m growth in Q2 2007 was 0,5 %, the same as in Q1 2007.

In the year-on-year comparison consumer prices increased in Q2 2007 compared to Q2 2006 by 2.4%, i.e. by 0.9 p.p. more than in Q1 2007. The growth of regulated prices speeded up to 7.2% (from 4.9% in Q1) and of market prices to 1.6% (from 1.1% in Q1).

Acceleration of y-o-y growth was recorded mainly for prices in alcoholic beverages, tobacco, health, food and non-alcoholic beverages, housing. By contrast, in 'post and telecommunications' the slow-down was recorded due to the price increase in telephone and fax services in May 2006.

Acceleration of y-o-y growth recorded mainly in prices of alcoholic beverages, tobacco continued in all months of Q2 due to high excise tax which finally resulted into a 14.4% price increase.

In ' health' higher amounts (by 17.4%) paid by patients for the drugs with prescription were recorded as a result of changes to the amounts paid for drugs with prescription effective from August 2006 and April 2007.

In food and non-alcoholic beverages an accelerated price growth was recorded in April due to a significant seasonal price increase in vegetables (by 24.8%). This wobble caused the y-o-y increase in the price of vegetables by 7.1% in Q2. Prices of bread and cereals were by 11.3% up, prices of fresh milk and fruit went up by 4.6% and 3.8%, respectively. The price of potatoes which usually showed a marked increase in June caused by the switch of market offer for early potatoes, rose in June 2007, m-o-m, only by 4.3%. Due to these developments a significant y-o-y growth of potato prices (in May by 42.9%) was reduced to 0.5% in June.

In housing, water, electricity and fuels the growth of prices accelerated mainly due to the increase of net rentals by 6.2% of which for dwellings with regulated rentals by 10.9%. Prices of electricity and solid fuels increased by 7.9 % and 17.5%, respectively, and prices of water supply by 6.7 % and sewerage collection by 5.5 %. Natural gas prices increased in April, m-o-m, by 1.4%. Considering, that in April 2006, gas prices increased by the same value the y-o-y drop of the natural gas prices remained the same in Q1, i.e. 8.2%.

Prices of transport were affected by the prices of fuel which showed a gradual increase in all months of Q2 (average m-o-m rate of growth was 3.3%), however, in Q2 2006, similar development was recorded (average m-o-m growth rate was 2.8%). This resulted into a moderate y-o-y drop to 2.7% (from 4.4% in Q1). Lower were also the prices of cars, motorcycles and bicycles. Prices of transport services increased by o 1.7 %.

As it is clear from the chart, y-o-y development of consumer prices of automotive fuel corresponded with world prices of Brent crude oil, import prices of 'mineral fuels, lubricants and related materials' and prices of industrial producers of refined petroleum products.

Slightly lower than in Q2 2006 were, in addition to transport, also prices in closing and footwear, furnishings, household equipment and routine maintenance of the house. Lower were prices of equipment for the reception, recording and reproduction of sound and pictures, personal computers and mobile telephones.

Price increase of goods in total accelerated to 2.1% (from 0.5% in Q1), price of services increased by 3.1% (in Q1 by 3.2%).


Harmonized index of consumer prices in the EU27

According to preliminary data, the year-on-year increase in the average harmonized index of consumer prices (HICP) in the EU27 was 2.2% in April and 2.1% in May 2007. Prices grew most in Hungary (by 8.7% and 8.4%) and in Latvia (by 8.8% and 7.8%).In April, Finland and France ranked among states with the lowest HICP value (from 1.2% to 1.5%). In May the group of countries with low inflation rate joined Belgium, Sweden and Slovakia. In the CR the y-o-y HICP increase accelerated and in April and May (contrary to Q1) it reached the above-average value compared with the EU27 (2.7% and 2.4%). According to preliminary results, in the CR the y-o-y HICP was in June 2.6%. Growth of prices in Slovakia decelerated in April and May to 2.0% and 1.5% (2.1% in March). In Germany, the HICP increase remained unchanged for three months and stood at 2.0%.