Czech inflation rises to 2.5 percent

According to an initial estimate by the Czech Statistical Office (CZSO), consumer prices in the Czech Republic rose by 2.5% year-on-year in April. Compared to the previous month, they rose by 0.5 percent. Inflation thus accelerated further. In March, it was still at 1.9%, having fallen to its lowest level for almost ten years in February at 1.4%. Since then, price pressure has been increasing again. Observers expect that inflation could continue to rise in the coming months. Fuel prices drive inflation The main reason for the increase was higher fuel prices. "The growth in fuel prices was the main reason for the acceleration of overall inflation in April," said Miroslav Novák, chief analyst at the consultancy Citfin, according to the Czech news agency CTK. Novák explained that fuel prices had risen by almost a quarter year-on-year. The lower excise duty on diesel introduced by the government had only cushioned this increase to a limited extent. The higher energy and fuel prices are linked to the tense international markets and uncertainties in the Middle East. This development is also having an increasing impact on Czech consumer prices. Central bank likely to wait and see Despite the renewed rise in inflation, many market observers expect the Czech National Bank to leave the key interest rate unchanged at 3.5 percent for the time being. It has been at this level since May of last year. "Monetary policy will probably not react immediately to the current rise in inflation," David Marek, chief economist at Deloitte, told CTK. At the same time, he emphasized that the combination of external cost shocks, a looser fiscal policy and growing domestic demand must be closely monitored. The situation thus remains challenging for the central bank: inflation is still close to the target range, but price pressure is increasing again. The post Czech inflation rises to 2.5 percent appeared first on ostwirtschaft.de.