Czech consumer price indices increased by 2.8% year on year and by 1.3% month on month after the Czech Statistical Office (CZSO) confirmed its previous y/y inflation growth estimate.

“Year-year price development in January was significantly influenced by prices of food and housing,” highlighted Pavla Šedivá of CZSO. Inflation slowed down by 0.2 percentage points on the December 3% y/y growth.

“Prices of food continued in their y/y increase and were higher by almost 5% in comparison with the last January. On the other hand, prices of housing slowed down their growth and were higher by 1.3% y/y,” Šedivá added.

In the housing, water, electricity, gas and other fuels section, the y/y growth of prices of water supply slowed down to 4.2% (on +10.9% in December), sewage collection to 3.7% (+13.4%) and heat and hot water to 4.7% (+8.5%). Prices of electricity fell by 4.7% (+8%), as did prices of natural gas by 7.7% (-5.5% in December).

In Food and non-alcoholic beverages, most surveyed items accelerated their y/y price growth, including the growth in milk, cheese and egg prices of 8% (+5.4% in December), fruit of 7.4% (+5.9%), while prices of vegetables fell by 0.7% (-5.1%), sugar by 21.6% (-30.4%) and flour by 5.8% (-10.3%). Prices of meat fell by 3.5% (-1.1%).

The January slowdown in inflation was welcomed by analysts surveyed by the Czech Press Agency (CTK), who also pointed out that the m/m 1.3% increase was the slowest January growth since 2019.  

 “For this year, we expect annual average inflation slightly above 2%. It would mean that in some months of this year y/y inflation will venture even below 2%,” head economist at Generali Investments Radomír Jáč was quoted as saying by CTK.    

ING’s David Havrlant wrote in his comment on the 2.8% flash estimate that “it is clear that much of the boos comes from food prices, which can be deemed volatile,” as other analysts also pointed to food prices as representing an inflationary risk.

“Some accumulated cost pressures in agricultural producer prices are expected to drive pricing in the food segment over the coming quarters,” Havrlant projected.