Czech Republic: Inflation jumps to highest level in over three years
April 10, 2012
In March, consumer prices added 0.2% over the previous month, which followed an increase of the same magnitude in February. The monthly rise reflected higher prices for food and non-alcoholic beverages as well as for transport, amid higher fuel costs. As a result of the monthly increase, annual headline inflation rose from 3.7% in February to 3.8% in March, which marks the highest level since November 2008. The annual reading matched market expectations but exceeded the Central Bank's estimate, which had inflation moderating to 3.3%. At the current level, inflation remains above the Central Bank's target of 2.0% (with a tolerance margin of +/- 1.0 percentage points). Owing to the VAT rate increase in January, the Czech National Bank expects inflation to rise temporarily to just above 3.0% this year, before falling back below its target and end 2013 at 1.4%.
Author: Ricardo Aceves, Senior Economist