Inflation was up by 0.2 percentage points month-on-month in July to 2.9% returning to May levels after a brief slowdown in June, data from the Czech Statistics Office (CSO) published on August 12 showed.
Rising housing costs, notably rents and electricity which went up by 4% and 10.4% year over year contributed to the increase.
Consumer prices increased by 0.4% month-on-month and according to the Head of the Consumer Price Statistics Unit (CSO) Pavla Sediva, as quoted by Novinky.cz, “an increase was mainly affected by the rise of seasonal prices of package holidays that were, if compared to June, nearly 25% higher.”
The “recreation and culture” section of consumer prices increased by 24.8% m/m. Additionally, the prices of financial services under the “miscellaneous goods and services” category rose by 2.3% m/m.
CSOB analyst noted that the inflation is almost at the tolerance interval ceiling of the Czech National Bank (CNB). “Year-on-year inflation is nearly at 3% level and is still true that half of it is due to increasing housing costs. Not only real estate prices and rents, but also energy costs, water, sewer rates and other inevitable services are getting more expensive,” said Dufek, adding that as energy prices abroad show, the electricity bill will not get smaller any time soon.
“The published figures represent a slight inflationary risk to the CNB’s current forecast in the months ahead. According to the forecast, inflation will remain elevated in the upper half of the tolerance band around the CNB’s target in the second half of this year, reflecting persisting strong domestic price pressures and high growth in administered prices and food prices. Inflation will decrease at the start of next year, owing to the previous monetary policy tightening and an unwinding of the currently high growth in administered prices; it will be decreasing towards the 2% target during the year,” according to the CNB.
CNB’s current forecast predicts inflation will reach 2.5% this year and 2.2% in 2020.
Credit: bne IntelliNews