Czech Republic: Inflation drops in December
January 9, 2013
In December, consumer prices rose 0.1% over the previous month, which contrasted the 0.2% drop recorded in November. The monthly reading mainly reflected higher prices for food and non-alcoholic beverages as well as for housing.
Despite the monthly increase, annual headline inflation fell from 2.7% in November to 2.4% in December, which matched market expectations. The reading undershot the Central Bank's estimate of 2.8% and mirrored the 2.4% recorded at the end of 2011. At the current level, inflation remains within the Central Bank's target of 2.0% (with a tolerance margin of plus/minus 1.0 percentage points).
The Czech National Bank expects inflation to inch down to 2.3% by the end of 2013. For 2014, the Bank predicts inflation to fall further to 1.7%.
Author: Ricardo Aceves, Senior Economist