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News

Agricultural prices report double-digit growth

23.06.2017
Company: Komerční banka, a.s.

While agricultural prices continued their strong growth, prices in industry dropped sharply. The slump was to a gross extent due to global commodity prices, led by oil. In agriculture, a variety of items from fresh fruits to livestock showed strong price dynamics. Service prices unexpectedly eased while construction prices recorded only minor growth.       

Industrial prices dropped 0.5% mom in May, and their yoy dynamics decelerated to 2.3% in May from 3.2% in April. The deceleration is mainly due to oil prices, for which average prices decreased in May while showing significant fluctuations. Prices of chemicals also declined, as well as other commodities and transport equipment. The food sector hindered an even stronger decrease of the overall price level in industry. It increased 0.5% as it followed the surge in agricultural prices.  
Agricultural prices maintained the growth started at the beginning of the year. In May, mom growth printed 1.7%, resulting in strong 12.6% yoy dynamics, while since January to May growth reached 7%. Their sound dynamics are due to more expensive livestock production. Nevertheless, the crops have not been cheapening, either. Today’s statistics indicate that we can expect growth in food prices in terms of consumer prices.   

Construction work prices slightly increased 0.1% mom in May, and their yoy dynamics moved to 1.5%. In contrast, a mild decrease of 0.1% mom was recorded by service prices.  

Producer prices are set to decline in the months to come. This is suggested by the continuous decrease of global oil prices. Brent oil is trading at close to USD47 per barrel, while its average price in May was USD51.4 per barrel. The high yoy dynamics of agricultural prices should start easing gradually while prices in services should gradually grow as they will be supported by increasing demand pressures. The construction sector revived in April thanks to building construction. In the second half of the year, infrastructure construction should join and together, it will push the prices in the sector up. Overall, we expect inflationary pressures in the economy to persist.

 

Tags: Finance |

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