Inflation Report II/2008

Transcription

1 CNB s New Forecast Inflation Report II/8 Tomáš Holub Monetary and Statistics Department Meeting with analysts, Prague, 6 May 8

2 Outline External assumptions; Recent trends in inflation and the economy; Fiscal policy; Regulated prices and tax changes; Exchange rate and imported inflation; Forecast of GDP, inflation and interest rates; Alternative forecast scenario (g3 model).

3 External Assumptions (CF4) (difference in p.p.) Eurozone Effective GDP (y/y %) (difference in p.p.) Eurozone Effective CPI (y/y v %) Diff. RS3 RS (difference in p.p.) USD/EUR (USD/EUR) (diffrence in p.p.) R Euribor (% p.a.) (difference in p.p.) Oil Brent (USD/barrel) (difference in p.p.) Petrol Prices (USD/kg) I/7 II III IV I/8 II III IV I/9 II III IV I/7 II III IV I/8 II III IV I/9 II III IV Reduced growth optimism vs. higher inflation and energy prices; changing interest rate outlook.

4 Inflation Inflation CPI (y-o-y) Core inflation without energies - I/ I/3 I/4 I/5 I/6 I/7 I/8 Inflation in Q/8 above previous forecast; Regulated prices and core inflation higher than expected; April 8: headline inflation (6.8 %) and MP inflation (4.7 %) slightly above new forecast.

5 Structure of Inflation (excluding taxes) 5 Tradables - food, beverages, tobacco Tradables - other excluding energies Nontradables - regulated Nontradables - other 5-5 / 7 / 7 /3 7 /4 7 /5 7 /6 7 /7 7 /8 Food, beverages and tobacco price growth excluding taxes has slowed down; Acceleration in prices of NT goods (restaurants, imputed rents, pressure from domestic economy).

6 GDP Actual and Potential 8 6 Real GDP (left axis) Potential output (left axis) Output gap (right axis) I/ I/3 I/4 I/5 I/6 I/7 I/8 3-3 The output gap estimate (. %) has been revised up; Slowdown in household consumption growth; Monetary conditions in Q/8 slightly tight (tight exchange rate component, slightly loose interest rates).

7 Pressures from the Real Economy Real marginal costs gap Real wage gap Ouput gap I/ I/3 I/4 I/5 I/6 I/7 I/8 Real wages antiinflationary; Nominal wage growth in business sector below forecast in Q4/7; But a marked speed-up in Q/8 (partly tax optimisation); Overall pressures from the real economy proinflationary.

8 Fiscal Situation in % of GDP (ESA 95) ,6,9,6,6,4,,, -, -,5 -,7 -, Deficit Fiscal impulse Deficit in 7 lower than expected; Forecast of deficit for 8 and 9 lowered further; Assumed fiscal impulse still restrictive in 8 and slightly expansionary in 9.

9 Regulated Prices Regulated prices - 3. SR 8 -. SR 8 Forecast for 8 raised due to higher impact of healthcare fees; Together with indirect taxes, the contribution to inflation will reach: 3.8 p.p. end-8,.8 p.p. end-9. - I/ I/3 I/4 I/5 I/6 I/7 I/8 I/9

10 Administrative Measures (selected items and total impact) Year/date Indirect tax changes in nonregulated prices Regulated prices (with tax changes) Item Impact on CPI inflation Item Change in price Impact on CPI Inflation 6-Total,6 p.p. 4.9%,8 p.p. 7-Total,9 p.p. 6.5%, p.p. 8 Excise duties on tobacco products,6 p.p. Regulated rents 3.%,4 p.p. (delayed impact: Q+Q) Electricity 9.5%,37 p.p. Heating.%,33 p.p. VAT 5 % --> 9 %.8 p.p. Natural gas 5.6%,35 p.p. Water 9.3%, p.p. Tax of energy,3 p.p. Health 4.%,57 p.p. (solid fuels) Total,43 p.p. 4.%,4 p.p. including impact of tax changes:,39 p.p. (VAT 5% --> 9%, tax of energy - electricity, heating) 9 Regulated rents.%,4 p.p. Electricity 7.%,8 p.p. Heating.%,6 p.p. Health.%,4 p.p. Total, p.p. 4.5%,84 p.p. including impact of tax changes:, p.p. Actual impact of higher excise duties on tobacco prices will probably be delayed to H/8.

11 Energy Prices Forecast slightly lowered despite higher oil prices (only partly offset by weaker USD) due to a model change; Overall impact on the forecast negligible. Energy prices (y-o-y) - 3. SR 8 Energy prices (y-o-y) -. SR 8-5 I/ I/3 I/4 I/5 I/6 I/7 I/8 I/9

12 Exchange Rate Nominal exchange rate CZK/EUR 6 5 I/ I/3 I/4 I/5 I/6 I/7 I/8 Date of forecast 4/7 7/7 /7 /8 4/8 External forecasts of CZK/EUR Next quarter Y horizon CF CNB s survey CF

13 Import Prices excl. Energy Much more anti-inflationary due to stronger exchange rate compared to the previous forecast. - Import prices excluding energies - 3. SR 8 Import prices excluding energies -. SR 8 - I/ I/3 I/4 I/5 I/6 I/7 I/8 I/9

14 Pressures from the Real Economy.5 Real marginal costs gap - 3. SR 8 -. SR More inflationary initially, but the pressures will fade away quite fast I/ I/3 I/4 I/5 I/6 I/7 I/8 I/9

15 Pressures from the Real Economy Real marginal costs gap Real wage gap Output gap I/ I/3 I/4 I/5 I/6 I/7 I/8 I/9 Output gap will turn negative (restrictive fiscal impulse, exchange rate and weak foreign growth); Real wages will turn pro-inflationary in 9 due to fast nominal wage growth and sharp drop in inflation.

16 GDP Growth Forecast y/y change Gross domestic product Household consumption Government consumption Fixed investment Exports Imports GDP growth forecast revised up by.6 p.p for 8, but lowered for 9 by the same amount; Slightly higher forecast of consumption growth due to higher wages and increase in pensions; Investments and net exports lowered for 9.

17 GDP Growth Forecast II III IV I/7 II III IV I/8 II III IV I/9 II III IV 9% 7% 5% 3% conf idence interval Pronounced slowdown in growth in 8, but a turn-around during 9; Uncertainty about speed / strength of exchange rate impact.

18 Nominal Wage Growth Nominal wage growth (y/y in % ) - 3. SR 8 -. SR 8 I/ I/3 I/4 I/5 I/6 I/7 I/8 I/9 Figure adjusted for the effect of tax optimisation; Growth rate of average nominal wage in business sector:.4 % in 8, 9. % in 9; Revised up for both years; NULC growth: 4. % in 8, 3.3 % in 9.

19 Core Inflation Core inflation (excl. taxes) - 3. SR 8 -. SR 8 Forecast initially much higher due to Q/8 outcomes and stronger pressures from real economy; Later on, the domestic pressures will vanish and the anti-inflationary exchange rate impact will dominate. I/ I/3 I/4 I/5 I/6 I/7 I/8 I/9

20 Food Prices (excluding taxes) 5 Food price inflation (excl.taxes) - 3. SR 8 -. SR 8-5 I/ I/3 I/4 I/5 I/6 I/7 I/8 I/9 Forecast lowered due to delayed impact of higher tobacco taxes and stronger exchange rate; Uncertainty high, but recent information not suggesting further price level increases.

21 Agricultural Commodity Prices Prices have levelled-off (or have started to fall); Optimistic harvest and future inventories estimates.

22 Headline Inflation Forecast Monetary policy horizon Inflation target II III IV I/7 II III IV I/8 II III IV I/9 II III IV 9% 7% 5% 3% conf idence interval Overall, the forecast has seen only subtle changes; Inflation slightly below the 3% target on the MP horizon.

23 MP Inflation Forecast Monetary policy horizon Inflation target II III IV I/7 II III IV I/8 II III IV I/9 II III IV 9% 7% 5% 3% conf idence interval The impact of tax changes will fade away in 9.

24 Interest Rate Forecast II III IV I/7 II III IV I/8 II III IV I/9 II III IV 9% 7% 5% 3% conf idence interval Consistent with the forecast and its assumptions is broad stability in nominal interest rates initially, followed by a decline still in 8 and stability in 9.

25 Headline Inflation Alternative Scenario ( g3 model) Monetary policy horizon Inflation target II III IV I/7 II III IV I/8 II III IV I/9 II III IV 9% 7% 5% 3% conf idence interval Basic scenario Alternative scenario Alternative scenario slightly higher on the MP horizon than the baseline, inflation close to the 3 % target.

26 MP Inflation Alternative Scenario Monetary policy horizon 4 3 Inflation target II III IV I/7 II III IV I/8 II III IV I/9 II III IV 9% 7% 5% 3% confidence interval Baseline scenario Alternative scenario MP inflation also close to the target.

27 Interest Rate Forecast Alternative Scenario II III IV I/7 II III IV I/8 II III IV I/9 II III IV 9% 7% 5% 3% conf idence interval Basic scenario Alternative scenario The interest rate outlook is quite similar to the baseline.

28 GDP Growth Forecast Alternative Scenario II III IV I/7 II III IV I/8 II III IV I/9 II III IV 9% 7% 5% 3% conf idence interval Baseline scenario Alternative scenario The projected growth slow-down is less pronounced in the alternative scenario than in the baseline.

29 Thank you for your attention. cnb.cz)