Czech annual consumer prices in September saw the highest growth in 13 years, standing at 4.9%, up by 0.8 percentage point (pp) month-on-month, driven mainly by increase in housing and transport prices, data by the Czech Statistics Office (CSO) shows.
The inflation acceleration significantly exceeded the upper boundary of the tolerance band around the Czech National Bank´s (CNB) target.
“Consumer prices in September increased by 0.2% compared with August and 4.9% year-on-year. Y/y price growth was detected in the majority of surveyed items. Owner occupied housing costs increased, also e.g. prices of fuels, tobacco, motor cars, garments, catering services in restaurants or household furniture went up,” noted Pavla Sediva, head of Consumer Price Statistics Unit of CSO.
“The September annual consumer price inflation figure was markedly higher than predicted by the CNB’s summer forecast, drawn up during July. The deviation of observed inflation from the forecast, which had already been visible in August, widened further in September,” said CNB Executive Director at the Monetary Department Petr Kral, adding that it was due predominantly to an unexpectedly sharp pick-up in core inflation and substantially faster growth in food prices.
Prices in housing, water, electricity, gas increased by 3.3% y/y and by 2.5% m/m, prices in transport, prices of motor cars went up by 6.0% y/y (5.3% m/m) and fuels and lubricants for personal transport equipment by 20.4% y/y (19.0% m/m).
Prices of goods in total and services went up by 4.4% and 5.7%, respectively.
According to Kral, the published data indicate unexpectedly strong and across-the-board inflation pressures from the domestic and foreign economy, which represent a significant inflationary risk to the CNB’s current forecast.
“The situation is evolving towards a much faster increase in interest rates than assumed in the summer forecast. The CNB has already responded to this risk by raising interest rates by three-quarters of a percentage point at the monetary policy meeting in September and will assess it comprehensively in the forthcoming autumn forecast,” he added.