William Malcolm

Czech Producer Price Inflation Grows In June

Industrial producer prices in the Czech Republic rose by 6.1 percent year on year in June this year, which was the most significant growth since May 2011. The Czech Statistical Office (CSO) announced. Prices also rose in other sectors. Agricultural producer prices rose by 5.8 percent, construction work prices by 4.1 percent, and market services for businesses rose by 0.9 percent. Prices in agriculture have been growing most markedly since July 2019 and prices in construction since last June.

According to ČSOB analyst Petr Dufek, a turnaround in the development of producer prices is not likely in the near future. “Prices are only gradually reacting to the previous rise in prices of foreign markets, and in addition it will be necessary to start counting on higher energy costs. .

Due to growing demand, producer prices, according to Generali Investments CEE chief economist Radomír Jáč, are easier to reflect in final prices, ie in rising consumer inflation. “The development of producer prices is thus a signal for the CNB to continue raising its interest rates,” he said.

Industrial and agricultural producer prices have been rising steadily for several months. While last year, when the world was hit by the covid-19 pandemic, agricultural prices fell year-on-year throughout the year, this year they have been rising since March. Prices in industry also fell many times last year, but this year they have been rising steadily since February. They have achieved the largest increase in the last ten years. “This significant growth was mainly influenced by prices in the coke and refined petroleum products sector and in the related chemicals and products sector, where prices increased by 39.6 percent year-on-year,” said Vladimír Klimeš, head of the CZSO industry and foreign trade statistics.

In industry, prices of metals and metal products also rose by 14.1 percent in June, or prices of wood, paper and printing by 8.9 percent. On the other hand, prices of processed and preserved meat and meat products fell by exactly five percent and prices of means of transport by 2.6 percent.

In agriculture, prices rose by nine percent in crop production and by two percent in animal production. For example, prices of cereals were higher by 10.7 percent and oilseeds by 15.8 percent. Prices of milk also rose by 6.3 percent, cattle by 5.3 percent and eggs by 5.2 percent. Prices of vegetables decreased by 14.8 percent, potatoes by 4.4 percent, fruit by 3.7 percent and pigs for slaughter by 9.7 percent.

Prices of construction work and market services for companies managed to maintain year-on-year growth during the pandemic last year as well. Also this year, since the beginning of the year, prices in these sectors are still rising. In construction, materials and products consumed by builders rose by 9.5 percent in June. In services, for example, prices for employment services increased by 7.3 percent, for security and search services by 3.3 percent and for storage and support services in transport by 2.2 percent. On the other hand, information services fell by 5.2 percent, advertising and market research services by 2.3 percent, and architectural and engineering services by 1.7 percent.

Prices in most of these sectors rose in June and month on month. Agricultural producer prices rose by two percent, industrial producer prices by 0.8 percent and construction work prices by 1.4 percent. Only prices of market services for enterprises fell by 0.4 percent.