Czech Retail Jump Shows Shopping Rush After Koruna Sales

Czech retail sales grew at the fastest pace in almost three years as shoppers snapped up consumer goods after policy makers began weakening the koruna.

Retail sales jumped 6.1 percent from a year earlier in November, the most since January 2011, compared with a 0.6 percent decline the previous month, the Statistics Office said today. That’s more than the 1.3 percent median estimate in a Bloomberg survey of 10 analysts.

The Ceska Narodni Banka started koruna sales in early November in a bid to prevent deflation and revive economic growth after a record-long recession. The currency’s importance as a policy tool grew after the bank cut its benchmark interest rate to a “technical zero” in 2012. Its depreciation makes imports more expensive and boosts export competitiveness.

“Such a brutal increase can be attributed to the interventions,” Vaclav France, an analyst at Raiffeisenbank AS in Prague, said by e-mail. “People stormed shops as they feared future price increases and they probably did a large part of their Christmas shopping in November. But the question is: how long will this shopping frenzy will last?”

The koruna strengthened 0.1 percent to 27.381 per euro by 11:39 a.m. after gaining 0.2 percent yesterday when data showed December monthly inflation was the fastest in six months and November industry growth was more than analysts estimated. It’s lost 5.8 percent since interventions began, the fifth-worst performance of 24 emerging-market currencies Bloomberg tracks.

Intervention Effect

The central bank has committed to sell the koruna to prevent it “strengthening too much” beyond 27 per euro and will keep that level until at least 2015, Governor Miroslav Singer said Dec. 17. Policy makers can’t fully assess the interventions’ effect yet and will wait for January and February inflation data for a “deeper analysis” of price trends, he said yesterday on the bank’s website.

Retail sales rose 7.8 when adjusted for the working-day difference, and expanded a seasonally-adjusted 3.6 percent from October, the statistics office said. Cars and non-food items were the main drivers of annual growth, it said.

The interventions’ effect may fade in the coming months after the weaker koruna stoked consumer-goods prices, according to Marek Drimal, an analyst at Komercni Banka AS in Prague.

“We expect a quarterly decline in household consumption in the first quarter because consumer demand was already drained in November and partly in December,” Drimal said in a note.

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