In today’s business news: Consumer prices have risen by 4.7 percent following a VAT hike, the American Anheuser-Bush purchases the Budějovický měšťanský brewery in hopes of improving its chances in an ongoing trademark dispute, public health insurer VZP may see a budget deficit of up to three billion Czech crowns in 2012, regular and diesel fuel reach record prices, and the forecast for the Czech construction sector for 2012 is the worst among the Visegrad Four.
Consumer prices are on the rise following the increase of the lower category VAT rate from 10 to 14 percent. However, the cost of consumer goods, especially imported ones, is likely to grow by more than 4 percent due to the European debt crisis. So far, a growth of 4.7 percent has been observed since the VAT hike was implemented. In December, consumer prices rose by 2.4 percent year-on-year. Most affected by this trend were groceries. Compared to the beginning of the year, retail prices of eggs and sugar had grown by 19.3 and 42.2 percent, respectively. Retailers increased prices gradually last year to prevent a sudden spike at the beginning of this year, when the increased VAT was introduced.
The American brewery company Anheuser-Bush, which for decades has been in a trademark dispute with the Czech state-owned Budějovický Budvar brewery, has purchased the Budějovický měšťanský brewery, which is also in trademark and appellation-of-origin disputes with the state-owned brewery over the use of the Budweiser brand. Experts say Anheuser-Bush, which produces the American Budweiser brand beer, most likely hopes that the acquisition may improve its chances of acquiring Budvar in the case of a privatization of the state-owned company, and also to resolve the Budweiser trademark issue.
Anheuser-Bush and Budějovický Budvar have been leading a fierce legal battle for decades. The term Budweiser comes from Budweis, the German name for České Budějovice, the South Bohemian town where Budvar is produced.
Public health insurer VZP, the country’s largest health insurance company, may be seeing a budget deficit of up to three billion Czech crowns in 2012. VZP representatives have said that the insurer does not have any financial reserves and thus the deficit could lead to a delay in the company’s payments to doctors and hospitals of up to a week. In the first half of the year, VZP is likely to be able to maintain a balanced budget due to an extraordinary payment of three billion Czech crowns that comes as part of a new law over the redistribution of health insurance funds approved last year. However, budget problems are likely to hit VZP in the second half of the year.
Since 2009, VZP’s budget has annually been in deficit. In 2010, it reached 5 billion Czech crowns.
The cost of regular and diesel fuel has grown to a record of 35.54 and 36.07 Czech crowns per liter, respectively, according to figures released by the Czech Statistical Office on Friday. In particular, prices of the Natural 95 type, which is the most-sold fuel on the Czech market, have reached a new high, exceeding even last year’s record prices. According to analysts, this spike in petrol cost is connected to a drop in the exchange rate of the Czech crown to the American dollar. The trend is likely to continue.
According to Euroconstruct, the main network for construction, finance and business forecasting in Europe, the Czech construction sector in 2012 will most likely see a fall of 4.1 percent in its output, which will put the Czech Republic’s building industry at the bottom of the Visegrad Four. For 2013, Euroconstruct forecasts another drop of the Czech construction output by 3.8 percent. The sector is likely to see a recovery in 2014.
A hike in VAT is among the key contributing factors to the stagnation of the Czech construction industry, since it has lead to an increase in real estate prices. In Poland and Slovakia, the construction sector is seeing an upwards trend.