Czech Republic Inflation

Czech Republic

Consumer prices fall in June amid E.Coli outbreak

In June, consumer prices dropped 0.17% over the previous month, which contrasted the 0.51% increase registered in May and analysts' expectations of a 0.30% rise. The monthly fall reflected a sharp decline in prices for vegetables (-14.9% month-on-month), in particular prices for tomatoes (-34.6% mom) and salad cucumber (-34.6% mom), following the panic caused by the E.Coli bacteria outbreak in Germany. As a result of the monthly fall, annual headline inflation moderated to 1.8% in June from 2.0% in May, which had represented the highest rate since December 2010. The annual reading undershot market expectations, which had anticipated that inflation would rise further to 2.1%, but was broadly in line with the Central Bank's estimate that inflation would fall to 1.7% thus hovering below its inflation target rate of 2.0% 1.0 percentage points. The Central Bank expects inflation to rise to 2.3% in the final quarter of this year before inching down to 2.2% in the fourth quarter of 2012.

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