Czech annual inflation edges down to 0.9% in Oct 2013, in line with expectations.

By bne IntelliNews November 11, 2013

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.

  Oct 2013 y/y change Sept 2013 y/y change Oct 2013 m/m change
Total 0.9 1.0 0.2
Food and non-alcoholic beverages 3.5 4.6 -0.2
Alcoholic beverages, tobacco 3.1 3.5 1.2
Clothing and footwear 1.3 0.9 3.3
Housing, water, energy, fuel 1.3 1.2 0.0
Furnishings, households equipment and maintenance -1.1 -1.2 0.1
Health 1.4 1.4 -0.5
Transport -1.4 -1.2 -0.8
Post and telecommunication -11.2 -11.6 -0.2
Recreation and culture 0.8 0.5 0.3
Education 1.2 1.4 -0.1
Restaurants and hotels 1.8 1.9 0.0
Miscellaneous goods and services 1.2 1.2 0.4
Source: Stats office      

Related Articles

Czech judiciary denounces Poland's move to end separation of powers

Senior Czech judges on July 21 denounced Poland's judicial overhaul as an attack on the rule of law. With big street protests in the Czech Republic's neighbour seemingly gathering momentum – 120 ... more

Strongly profitable Czech petrochemical maker Unipetrol puts cracker explosion behind it

Unipetrol looks to have finally got over the August 2015 fire and explosion that wrecked its steam cracker, an indispensable installation in the production of ethylene feedstock needed to manufacture ... more

Evolution Equity Partners closes $125mn cybersecurity-focused fund

Evolution Equity Partners announced on 17 July the final closing of a new fund with total capital commitments of $125mn to make investments in cybersecurity and next generation enterprise software ... more