Czech c-bank gov says inflation heading below target, recession hits bottom.

By bne IntelliNews February 20, 2013
Inflation in the Czech Republic is heading deep below the central bank's target of 2% and the economic recession that started nearly a year and a half ago is hitting its bottom, central bank governor Miroslav Singer was quoted as saying by CTK news agency. Speaking at an economic conference at the University of Hradec Kralove, Singer said that inflation is mainly driven by regulated prices, indirect taxes and food prices. Consumer prices in the country increased by 1.9% y/y in January, slowing their annual growth from 2.4% in December. Singer also said that the Czech economy, which has been contracting in all quarters of 2012, is now going through the bottom of the drop. The GDP shrank by 0.2% in Q4 from the previous three months, following a 0.3% fall in the third quarter. The annual decline in the GDP deepened to 1.7% in Q4 from 1.3% in Q3 and was the worst reading since Q4 2009. The Czech economy is suffering from weak domestic demand as the government introduced a number of austerity measures, including spending cuts and tax rises, as it seeks to trim the budget gap to below the EU's ceiling of 3% of GDP. Foreign demand has been the main growth driver but its pace is weakening in line with the slowdown in the euro zone, the country's main export market.

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