Consumer prices in the Czech Republic increased by 0.2% y/y in March 2014, the same as in the previous two months as a faster growth in alcohol and clothing prices was offset by weaker rises in food prices and declining transport, housing and utility costs, data from the statistics office showed. The annual rise was in line with market expectations and was the weakest in more than four years.

In monthly terms, consumer prices did not change from February when they edged up by 0.2%. The market expected a modest gain of 0.1%.

Housing and utilities charges (27% of the basket) ticked higher by 0.1% on the month slightly softening the annual drop to 2.3% in March from 2.4% in February. The annual contraction was mainly due to a 10.5% decline in electricity and a 9.1% drop in natural gas charges.

Food and non-alcoholic beverage prices (17% of the basket) edged up by 0.4% m/m in March easing the annual growth of the component to 3.7% from 4.2% in February. Transport prices fell by 0.3% m/m in March leading to a 0.7% annual decline versus a 0.1% y/y hike in February. The annual growth in alcohol and tobacco prices accelerated to 4.5% in March from 4.2% the month before.

The March annual inflation was 0.2pps below than the central bank’s forecast for the month and below the lower band of its target range of 1%-3%. The indicator had been running below the target up to November 2013 when the bank was forced to step into the currency market to weaken the koruna and ward off deflation threat. In a recent statement, central bank vice-governor Vladimir Tomsik has said that the threat of deflation has been averted thanks to the central bank’s currency interventions. The bank does not plan a change in its policy at least until the start of 2015.