Czech inflation bucks regional trend as it accelerates in September

By bne IntelliNews October 9, 2015

Czech consumer prices edged up 0.4% y/y in September, accelerating from 0.3% in August, the statistics office reported on October 9.

Bucking the regional trend, the rise in inflation should help the Czech National Bank in its continued drive to defend its ultra-loose monetary policy. At the same time, it will likely also bring the curtain down on speculation of further moves to loosen conditions.

The September CPI reading was slightly above market expectations of 0.3%. It also sees the Czech Republic far more resiliant to deflationary forces than Hungary and Poland, which saw CPI sinking deeper into reverse last month.

The headline figure was, however, 2bp below the Czech National Bank’s (CNB) own forecast for the month. On a monthly basis, Czech consumer prices ticked lower by 0.2%, matching August's decline. 

The resumed fall in crude prices has proved the biggest drag on inflation across the region. Transport prices in the Czech Republic shrank 4.5% in September, deepening from a 3.7% fall the previous month. Fuel prices dropped 0.5% compared with a 1.2% decrease in August.

Overall, the data should alleviate any lingering concerns about deflation in the Czech Republic, analysts at Capital Economics note. Still, low global commodity prices and existing spare capacity mean the headline rate is likely to stay below the CNB’s 2% target over the next couple of years.

“Against this backdrop, while we don’t expect the CNB to loosen monetary conditions further, we do think the rate setting will continue to toe the same dovish line seen at last month’s rate-setting meeting”, the analysts write.

At its latest rate setting meeting on September 24, the CNB kept rates at effective zero and reiterated its commitment to defend the koruna cap. The CNB introduced the policy in late 2013, and has since pledged to keep the currency from gaining above CZK27 against the euro until the middle of 2016 at the earliest.

 

  Sept 2015, y/y  Aug 2015, y/y  Sept 2015, m/m 
Total 0,4 0,3 -0,2
Food and non-alcoholic beverages -0,5 -1,2 0,8
Alcoholic beverages, tobacco 5,3 5,1 0,4
Clothing and footwear 2,8 2,5 2,7
Housing, water, energy, fuel 0,8 0,8 0,1
Furnishings, households equipment and maintenance 0,3 0,2 -0,5
Health -7,2 -7,1 0,2
Transport -4,5 -3,7 -1,1
Post and telecommunication -0,7 -0,9 0,0
Recreation and culture 1,8 1,5 -3,5
Education 1,2 1,0 1,1
Restaurants and hotels 1,4 1,5 0,1
Miscellaneous goods and services 0,8 1,1 0,2
Source: Stats office      

Related Articles

Ukraine's central bank cuts key policy rate to 12.5%

The National Bank of Ukraine (NBU) will cut its key policy rate by 0.5 percentage points to 12.5% per annum from May 26. The move is consistent with the pursuit of inflation ... more

World Bank forecasts a 0.4% y/y decline in Belarus's GDP for 2017

The Belarusian economy will decline by 0.4% year-on-year in 2017, followed by a modest growth of 0.7% in 2018 and 1.2% in 2019, the World Bank forecasts in its Belarus Economic Update published on ... more

EIB and Belarus sign Framework Cooperation Agreement

The European Investment Bank (EIB) and Belarus inked the Framework Agreement on Cooperation on May 15, which paves the way for the lender to invest up to €200mn in Belarusian projects, the Foreign ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss