Development of consumer price indices - 3. quarter of 2005

Consumer prices increased in the third quarter of 2005 by +1.9% compared to the corresponding period of last year. It is by 0.3 percentage point more than in the first and second quarter of 2005. Especially two COICOP divisions of the consumer basket participated in the acceleration of the year-on-year price growth in the third quarter: transport and communications. Price growth in transport was caused by a marked increase of automotive fuel prices, which was observed mainly in September. The acceleration of year-on-year price growth in communications was namely due to prices of public telecommunication services or changes in lump fees for operation of residential telephone lines (cancellation of a free credit for telephone calls), which took place already in June and their influence was fully reflected in all the three months of the third quarter. A slightly faster price growth was also in 'housing' as a result of natural gas price increase from July by +4.3%. On the contrary, price growth decelerated in: 'restaurants and hotels' and 'miscellaneous goods and services', which was due to the difference in VAT for services (5% until April 2004 and 19% as from May 2004). This difference has no more influence since May 2005 and in the third quarter the higher VAT was reflected in all the three months. Further fall in prices of 'food and non-alcoholic beverages' had also a decreasing influence on the price level. In the third quarter of 2005, market prices increased by +0.7% and regulated prices by +6.0%.
Change in price development occurred in transport, in which prices turned from their year-on-year decrease in both the first and second quarter to an increase in the third quarter. This phenomenon was caused mainly by automotive fuel prices, which increased by +12.7% year-on-year (of which by +21.6% in September). The automotive fuel price growth was preceded by an increase of world prices of crude oil and import prices of 'mineral fuels, lubricants and related materials'. For example, Brent petroleum price reached USD 63.63 per barrel in August (average price in the second quarter was USD 52.81 per barrel) and was higher year-on-year by +52.3%. Also import prices of 'mineral fuels, lubricants and related materials' were growing in the y-o-y comparison (by +37.4% in July and +26.2% in the second quarter). On the contrary, prices of domestic producers of refined petroleum products grew markedly especially in the first quarter (+31.9%) and during the following months the increase slackened down to 8.1% in August. Prices of transport services increased by +3.4%. Lower than last year were prices of passenger cars, motorcycles and bicycles.
The biggest year-on-year price jump between the second and the third quarter was observed in communications, in which prices of public telecommunication services increased by +16.3% from +3.7% in the second quarter. This development was influenced by an increase in prices of public telecommunication services in June, which was reflected in all the three months of the third quarter. Prices of postal services were higher year-on-year by +15.5% due to higher postal fees introduced in February 2005.

Slight acceleration of price growth in housing was influenced mainly by natural gas prices, which were due to their increase since July higher by +14.7% year-on-year (in the second quarter +9.0%). Prices of electricity increased by +4.9% from +4.0% in the second quarter. Both items reflected in all the three months of the third quarter the VAT decrease from 22% to 19% in May 2004; it made an influence only from May during the second quarter. Prices of housing were influenced also by an increase of prices for water supply +4.5%, sewage collection +5.9% and refuse collection +9.9%.
Prices of food and non-alcoholic beverages were during all the months of the third quarter lower than in the same period of the year 2004 and their decrease was slightly more marked than in both the first and second quarter of 2005. This development was influenced mainly by the decrease of prices of fruit by –4.8% and oils and fats –0.3% (in the second quarter an increase by +5.8% and +1.5%, respectively) as well as by a deeper decrease of prices of bread and cereals, which was -3.6%, of which decrease of flour prices was –17.4%. Lower than last year were also prices of potatoes –11.7%, eggs –11.6%, sugar –7.3%, pork meat –4.5%. On the contrary, prices of fresh vegetables increased by +6.8% (from the decrease by –6.9% in the second quarter) and prices of beef +4.4%, milk +2.2% and cheese +3.9%.
Slowing down of price growth continued in alcoholic beverages, tobacco; restaurants and canteens; miscellaneous goods and services. In all the three cases, the price growth slowed down due to taxes introduced in 2004. For tobacco products it was the excise tax increase from January 2004; however, it influenced prices of cigarettes on the market only from May 2004, because they were sold from the stock for the old prices. Thus, prices of cigarettes in 2005 (though stable) were in individual quarters compared to prices in 2004 burdened by different excise tax. Similarly in restaurants and canteens and in personal services (included in miscellaneous goods and services) due to elimination of the influence of higher VAT from May 2005 the year-on-year price growth slowed down in the third quarter as for food prices in restaurants to 2.1% (from 4.0% in the second quarter of 2005), in canteens to 3.1% (from 7.6%) and for personal services to 3.0% (from 5.2% in the second quarter of 2005).

In recreation and culture, similarly as in the previous years, seasonal prices of package holidays markedly increased month-on-month in July and August and sharply fell in September. Resulting from that was the average year-on-year increase of prices of package holidays in the third quarter of 2005 by +3.1%. Also prices of recreational services increased +5.8%, cultural services +1.3%, and newspapers and magazines +3.7%. Lower were prices of equipment for the reception, recording and reproduction of sound and pictures the long-term decrease of which continued.

In education, as the new school year started, prices increased by +3.4% month-on-month in September. However, the increase was lower than in September 2004 (an increase by +4.5%). It led to deceleration of year-on-year growth in September and thus also in the third quarter of 2005.

Prices of goods in total increased by +0.9 % and prices of services by +3.5 %.
The average year-on-year increment of harmonized index of consumer prices (HICP) in the EU25 reached 2.1% in July and according to preliminary data 2.2% in August. In the Czech Republic, the HICP increment was +1.4% both in July and August, while in September it accelerated to 2.0%. In Slovakia, prices increased by +2.0% in July and +2.1% in August. The fastest price growth was in Latvia (+6.3%) in August, while the lowest was in Sweden and Finland (+1.0%).