14 September 2005 -

Report Summary

The August CPI inflation is not a threatening one. It is rather a one-shot rise driven by the tax and oil price hike. We think the consequence will not be Central Bank rate-cut friendly and possibly the next rate cut will not appear before October. Anyway, Central Bank would prefer to wait until October even if the figure would be modest, due to worries about the outcome of October the 3rd, EU negotiations start up. Central Bank also places emphasis on September inflation due to the seasonal nature of accumulated annual adjustments in this month. On the other hand producers’ prices are little bit threatening. Increased costs are no longer easily swallowed into profit margins.

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