Czech consumer prices growth (inflation) increased by 1.7% year-on-year (y/y) and by 0.6% month-on-month in July, according to a flash estimate published by the Czech Statistical Office (CZSO) on August 5.

This is up on the 1.5% y/y growth registered in June, was an unexpected easing on the 2.1% y/y registered in May, and came amid dropping of volatile fuel and food price baskets.

The July figures are unlikely to have a major impact on the Czech National Bank’s (CNB) monetary meeting scheduled for August 6. CZSO is scheduled to release final figures on August 11.

“The driver of inflation staying below the 2% CNB target are food prices, where deflation continues to be in place,” Riffeseisenbank analyst Martin Kron was quoted as saying by the Czech Press Agency (CTK).

The regulator is expected to keep the main interest rate unchanged at 3.75%, after it hiked the rates by 0.25 basis points in June in the first change in its monetary policy since last May when it lowered the policy rate by 0.25bp.

Kron projected the CNB would wait for further data releases, noting that price dynamics in services accelerated after a mild slowdown in June.

The July breakdown accompanying the CZSO’s flash estimate shows that prices of services registered the highest growth among the price baskets, rising by 4.7% y/y, while the greatest easing was registered in the food and non-alcoholic beverages basket, where prices fell by 3.1%.

Prices of energy rose by 2.1% y/y and prices of alcoholic beverages and tobacco by 3.7%. Prices of goods, including water supply, dropped by 0.2% and prices of unprocessed food by 2.3%.

Analysts surveyed by CTK expect inflation to crawl up to 2% or above towards the end of the year, and accelerate further next year amid higher prices of energy, fertilizers and the impact of ongoing heatwaves this year.

Analyst at Uniqua consulting Václav Franč pointed out the low comparison basis from 2025, projecting that “next year we will see values above 2%,” while he expects inflation to be 1.8% this year overall.