Czech Republic: Inflation falls to 18-month low
March 11, 2013
In February, consumer prices added 0.1% over the previous month. The reading represents only a fraction of the 1.3% jump recorded January, which had been buttressed by the rise in the value-added tax (VAT). The February increase mainly reflected higher prices for transport as well as for recreation and culture.
Annual headline inflation eased from 1.9% in January to 1.7% in February, which undershot both market expectations that had inflation inching down to 1.8% and the Central Bank's estimate of 2.0%. In addition, the reading represents the lowest level since August 2011 and 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 reach 2.3% by the end of this year before moderating to 1.7% by the end of 2014. FocusEconomics Consensus Forecast panellists share the Bank's assessment and also expect inflation to reach 2.3% by the end of this year, which is down 0.1 percentage points from last month's Consensus. For 2014, panellists expect inflation to fall to 1.8%.
Author: Ricardo Aceves, Senior Economist