Czech inflation slowed to 2.0% year-on-year in November from 2.2% in October. The latest figure was recorded as the lowest level since April, the Czech Statistical Office (CSU) reported on December 10.
“The development was again influenced mostly by prices of food and non-alcoholic beverages,” said the head of CSU consumer price statistics Pavla Sediva.
There were, meanwhile, increases in prices of housing, water, electricity, gas and other fuels, where prices of rentals for housing increased by 3.3%, water supply fees by 1.8%, sewage collection fees by 1.3%, electricity costs by 5.6%, and heat and hot water costs by 1.0%.
Price growth was recorded also in alcoholic beverages and tobacco, up by 3.4%, beer, by 4.5% and tobacco products, by 3.9%, as well as in transport—prices of fuels and lubricants for personal transport equipment increased by 10.1% y/y. Prices of goods in total and services went up by 1.2% and 3.3%, respectively. The overall inflation index excluding imputed rentals for housing was 101.6% y/y.
The month-on-month decrease in food and non-alcoholic beverages came primarily from lower prices of fruit and vegetables, down by 6.3% and 4.2%, respectively. Prices of oils and fats also went down by 4.2%, pork by 2.9%, sugar by 8.8% and non-alcoholic beverages by 0.8%, CSU report stated.
According to the Raiffeisenbank's analysts, inflation has stayed consistent with the target set by the Czech National Bank, but there is no reason for central bankers to be satisfied. “Core inflation remains high and, for example, services prices have risen by 3.3% y/y in November. In connection with the weaker crown, in our opinion, the need to raise interest rates persists. This will force the Bank Board to proceed to further interest rates,” said the Raiffeisenbank analyst Frantisek Taborsky.
“At the start of next year, inflation will increase into the upper half of the tolerance band around the CNB’s target due to a rise in core inflation, a renewed recovery in food price inflation and faster growth in administered prices. In the subsequent period, however, the overall inflation pressures will ease owing to growth in interest rates, renewed appreciation of the koruna and a gradual slowdown in wage growth. Inflation will therefore approach the CNB’s 2% target from above over the monetary policy horizon and stay at the target during 2020,” said the executive director of the Central Bank Monetary Department Petr Kral.