Czech Republic: Inflation falls for second month in a row
August 9, 2011
In July, consumer prices jumped 0.26% over the previous month, which contrasted the 0.17% drop observed in June and overshot market analysts' expectations, which had seen consumer prices rising 0.20%. The monthly increase was mainly the result of seasonal factors associated with the summer holidays, as prices for package holidays increased 13.4% over the previous month. Despite the monthly increase, annual headline inflation inched down to 1.7% in July from 1.8% in June, which marked the second consecutive month of falling inflation. The annual reading undershot both market expectations and the Central Bank's estimate that inflation would remain unchanged at June's 1.8%. As a result, inflation remains below the Central Bank's target of 2.0% 1.0 percentage points. The Central Bank projects inflation to close at 2.3% by the end of this year, before rising to 3.2% at the end of 2012.
Author: Ricardo Aceves, Senior Economist