International Property News
CZ Inflation, unemployment fell in March
7th April 2008
Analysts polled by CTK said that inflation fell to 7.1-7.3 percent in March from 7.5 percent in February due to food prices rising at a slower pace and lower prices of package tours.
The consumer price growth will slow, and at the end of the year the inflation rate could reach 5 percent, analysts said.
Unemployment decreased to 5.6 percent in March from 5.9 percent the previous month due to launch of seasonal work, according to analysts.
On Tuesday, inflation data will by published by the Czech Statistical Office and unemployment data by the Ministry of Labour and Social Affairs.
"March should made it clear that the records seen early this year are over and inflation is falling slowly," said CSOB analyst Petr Dufek.
Next Finance analyst Vladimir Pikora said that inflation slowdown was seen in March for the first time after eight months.
The impact of rising fuel prices and lingering effects of tax changes were offset by falling prices of food and package tours, said Patria Finance chief economist David Marek.
"Year-on-year inflation should start falling from its January and February highs," he said.
If inflation does fall, a risk of higher inflation expectations and wage demands should also diminish, said Marek.
"A dilemma of the central bank regarding interest rates should also ease," he added. The CNB would not have to raise interest rates in the nearest future.
Seasonal work is behind the lower jobless rate in March, analysts say.
The launch of seasonal work in agriculture or construction is of key importance for the labour market at this time of the year, said Dufek.
Raiffeisenbank analyst Ales Michl said that unemployment could fall until June this year. "A record pay rise will go hand in hand with it," he said.
The jobless rate could decline to 5 percent in mid-2008, according to Pikora. "This will be a problem for the economy because there will be an enormous lack of suitable staff," he said.
Source: Prague Monitor
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