Czech Republic: Inflation falls to lowest level in three and a half years
October 9, 2013
Consumer prices fell 0.4% in September over the previous month (August: -0.2% month-on-month), which represents the fourth fall in consumer prices in the last five months and the lowest monthly decline in nearly five years. According to the statistical office, seasonal factors were the main drivers behind the monthly decline, namely lower prices recreation and culture - particularly prices for package holidays.
Annual headline inflation fell from 1.3% in August to 1.0% in September - the lowest rate since March 2010 - exceeding market expectations that had inflation inching down to a 1.2% rate. Inflation sits below the Czech National Bank's target of 2.0% but within its tolerance margin of plus or minus 1.0%.
The Czech National Bank expects annual consumer prices to end this year at 1.6%, before inching up to 1.8% at the end of 2014. FocusEconomics Consensus Forecast panelists broadly share the Bank's assessment and expect inflation to reach 1.6% by the end of this year, which is down 0.1 percentage points from last month's Consensus. For 2014, panelists expect inflation to remain stable at 1.7%.
Author: Ricardo Aceves, Senior Economist