Czech annual inflation eased to 0.9% in October 2013 from 1% the month before mainly due to slower food growth, data from the statistics office showed. The reading, which was the lowest since March 2010, was in line with market expectations according to a Reuters poll.

In monthly terms, consumer prices edged up by 0.2% in October, following a 0.4% drop in September. The monthly rise was driven by higher alcohol and tobacco and clothing and footwear prices.

Housing and utilities charges (28% of the basket) flattened on the month pushing the annual growth of the component up to 1.3% in October from 1.2% in September.

Food and non-alcoholic beverage prices (15% of the basket) dropped 0.2% m/m reducing the annual growth to 3.5% from 4.6%. Transport prices shrank for the third straight month in October falling by 0.8% m/m leading to a deeper annual decline of 1.4% from 1.2% in September. Despite a 1.2% monthly rise in alcohol and tobacco prices, the component’s annual growth eased to 3.1% in October from 3.5% the month before. Clothing and footwear prices advanced 3.3% on the month in October bringing up the annual rise to 1.3%.

The October annual inflation was below the central bank’s forecast of 1% and also below the lower boundary of the tolerance band around its 2% annual target. The central bank cut its main two-week repo rate to 0.05% in November and said it will keep the rate at the current record low level until inflation pressures increase significantly. With traditional monetary policy tools exhausted, the central bank launched on Nov 7 the first in more than a decade currency interventions to weaken the koruna. Central bank governor Miroslav Singer said the bank will continue intervening on the market until significant inflationary pressures emerge. The bank wants to urge consumers to spend more and help the economy that is emerging from a record-long recession.