Czech Industry Shows Resilience

Czech manufacturing PMI remained in expansion territory in May, outperforming expectations despite rising input costs. While producers are passing costs to consumers, the statistical link between PPI and core inflation remains complex and indirect.

Key Takeaways

• 1.Czech manufacturing PMI softened in May but remains above the expansion threshold, showing unexpected resilience.
• 2.Producers are successfully passing higher energy and input costs to consumers due to robust demand.
• 3.The link between producer prices (PPI) and core inflation is cointegrated in the long term but loosely connected on a monthly basis.

Table of Contents

• Maintaining expansionary appetite
• Holding the line in expansion zone
• Producer and consumer prices co-move in a rather loose way
• Producer and consumer prices are not always friends
• PPI may start closing the gap

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