Czech annual inflation quickened to 1.1% in November 2013 from a 3.5-year low of 0.9% the month before mainly due to a faster growth in food prices, data from the statistics office showed. The reading was in line with market expectations according to a CTK poll.

In monthly terms, consumer prices edged down by 0.1% in November, following a 0.2% hike in October. The monthly drop in the CPI came as most components of the consumer basket declined with the exception of food prices, while housing and education prices stayed unchanged.

Housing and utilities charges (28% of the basket) flattened on the month and as a result the annual growth of the component stayed at 1.3% for the second straight month in November.

Food and non-alcoholic beverage prices (15% of the basket) ticked higher by 0.7% m/m bolstering the annual growth to 3.9% from 3.5%. Transport prices shrank for the fourth straight month in November falling by 0.2% m/m leading to a smaller annual decline of 0.3%. The annual growth in alcohol and tobacco prices eased to 3% in November from 3.1% the month before thanks to a monthly drop of 0.5%. Clothing and footwear prices shrank 0.4% on the month in November bringing down the annual rise to 0.9%.

The November annual inflation was in line the central bank’s forecast for the month and moved above the 1% lower boundary of the bank’s 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 and ward off deflation threat. 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.