Czech consumer prices grow by record 17% in June

Czech consumer prices grow by record 17% in June
Czech inflation up to 17.2% in June / bne IntelliNews
By bne IntelliNews July 14, 2022

Czech consumer prices rose by 17.2% year-on-year in June (chart), to the highest level since December 1993, according to data published by the Czech Statistics Office (CSO). The inflation growth slightly exceeded analysts' expectations, who had predicted inflation growth at 17%. It has also significantly exceeded the upper boundary of the tolerance band around the Czech National Bank’s (CNB) target.

"Y/y price growth has accelerated significantly since last July and already exceeded 17%. This acceleration was again most influenced by prices of food, which increased by 18% in June, y/y," said Jiri Mrazek, director of the Price Statistics Department.

"Although the CNB's spring forecast shows June inflation as a peak, we expect inflation to rise further not only because of continued general inflationary pressures but mainly because of the recently announced energy price increases by major suppliers in the Czech Republic," said Frantisek Taborsky, FX & FI Strategist at ING Bank, adding that these changes should feed through to inflation mainly in July and August. 

However, "given the uncertain mix of fixed and floating contracts, we can expect a second round of this effect in the coming months and a further jump in the New Year repricing in January," he noted. 

Petr Kral, Executive Director, Monetary Department, stressed that the increase in energy prices on exchanges to record highs in the spring months was also driven by Russia’s invasion of Ukraine. "The war is also reflected in rising food prices due to soaring prices of agricultural commodities, as Ukraine is one of the world’s leading wheat exporters. The marked increase in oil prices as a result of the war and sanctions on Russian oil exports to the EU is also reflected in exceptionally high year-on-year growth in fuel prices," he said. 

According to the ING Bank current forecast, inflation is expected to rise further to 17.8% in July. "However, given the above we could see a much bigger jump and we could see inflation very close to 20% y/y over the next three months," Taborsky said. 

He anticipates the new CNB forecast published in early August to show a similar trajectory, which may be one of the reasons for the CNB's currently more aggressive approach to FX interventions. "Despite this, for now, we still believe that the CNB will leave rates unchanged in August. However, this will lead to renewed pressure on the koruna, which may ultimately lead to an exit from FX interventions or a shift to a more flexible regime compared to the current commitment style, and an additional rate hike in September or at an unscheduled meeting if needed," he added. The CNB raised its key interest rates by 1.25 percentage points at the end of June, bringing the base interest rate to the highest level since 1999 at 7%.

Radim Dohnal, an analyst at, said that monitoring annual inflation is now rather confusing. According to him, the key is the rate of price growth or its change, i.e. m/m inflation. And it slowed to 1.6% in June. Before that it was 1.7% and twice 1.8%. "I consider that a slowing of the pace and a chance that we are at or past the peak," he noted.

In monthly comparison, consumer prices in June increased by 1.6%, driven primarily by higher prices in housing, water, electricity, gas and food and non-alcoholic beverages.

"Inflation in 2Q22 is an upside risk to the baseline scenario of the spring forecast and to the scenario featuring a more distant monetary policy horizon than the standard one used in the CNB’s forecasting system. All newly available data will be fully incorporated into the CNB’s summer forecast," commented Kral. 


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