While prices in agriculture continue double-digit growth, prices did not go up in other primary sectors. Cheaper oil tamed inflation dynamics in industry, and prices in construction corrected their previous rapid growth. Yet, we do not see a major decline in inflationary pressures. That said, we do not expect the CNB to cut rates anytime soon.

While prices in agriculture continue double-digit growth, prices did not go up in other primary sectors. Cheaper oil tamed inflation dynamics in industry, and prices in construction corrected their previous rapid growth. Yet, we do not see a major decline in inflationary pressures. That said, we do not expect the CNB to cut rates anytime soon.

Industrial producer prices dropped 0.7% mom in June, resulting in more than one percentage point easing to 2.5% yoy. The plunge in oil prices is the biggest driver of the move.  In CZK terms, oil prices are already 14.9% cheaper after they dropped 11.8% on average in June. However, not only oil-related products decreased in price. The price of transport equipment went down, as well. In contrast, the food industry impeded the price drop. That can be no surprise for those who looked at the agricultural prices. 

Agricultural prices increased 2.5% mom when meat was the main driver. In a yoy comparison, food prices are already 12.9% higher. The price growth is present across categories when only fruit prices create a major exception. The price dynamics in agriculture pass through into food price dynamics in terms of the consumer basket. That said, it is apparent that the food prices should remain elevated in the months to come.

Price growth in the construction sector eased. In mom terms, construction prices decreased 0.2% and thus corrected their previous steep growth. In a yoy comparison, their dynamics eased to 4.8%. The excess of demand still rules in the sector. Construction has undergone a reduction in production capacities in recent months.

Price growth eased also in the service sector. The headline mom growth printed a 0.3% drop, and volatile prices for marketing were once again to blame. Without their contribution, service prices would remain flat. The yoy growth amounted to 2.5%.

Announcement date: Tuesday, 23 July 2019

Announcement date: Tuesday, 23 July 2019

Accounting changes: Reported data were affected by the announced termination of the sale of Slovenian activities in mid-January. The figures for 2018 include Slovenia. The company discontinued publishing a detailed quarterly structure of its income statement.

Company results: We suppose the second quarter of 2019 built on the successful growth of recent years. CME’s sales probably increased approximately 4.0% to $189.1m compared with the same period the year before. From a seasonality point of view, the second quarter historically proves the second-best quarter (approximately 27% of annual revenues based on a 5Y average) behind the fourth quarter. This year again, growth will be supported by very good macroeconomic conditions in the countries where CME operates. GDP growth is in a positive correlation with higher revenues from TV advertisements. The US dollar has been strengthening against local currencies of CME markets since last year. This leads to growth of unrealised FX losses.