Czech inflation confirmed at 2.5 percent

Consumer prices in the Czech Republic rose by 2.5 percent year-on-year in April. Compared to the previous month, they rose by 0.5 percent, according to the Czech Statistical Office CZSO. The authority thus confirmed its preliminary estimate from the beginning of May. Inflation accelerated compared to March, when it was still at 1.9 percent, and reached its highest level in six months. Price pressure could increase further in the coming months, as higher energy and transportation costs are likely to gradually have a greater impact on consumer prices. Fuel prices drive inflation "The development of consumer prices in April was once again significantly influenced by the prices of fuels and lubricants," explained Pavla Šedivá from the CZSO. The price increase for food and non-alcoholic beverages, on the other hand, was more moderate at 1.3 percent year-on-year and partially dampened the overall effect. In April, diesel cost an average of 44.5 crowns, the equivalent of around 1.8 euros, per liter. Natural 95 petrol sold for an average of 41.1 crowns per liter. According to Šedivá, these were the highest prices since October and November 2022. In the transport sector, consumer prices rose by 8.7 percent year-on-year. The increase was particularly significant for fuels and lubricants: They increased in price by almost 25 percent, following a rise of 13 percent in March. Alcoholic beverages and tobacco products also became more expensive. Prices for spirits and liqueurs rose by 5.8%, as did wine prices. The price of beer rose by 2.7 percent and tobacco products by 5.6 percent. Rents for housing, water, electricity, gas and other fuels rose by 6.3%. Water rose by 3.9 percent, sewage charges by 3.8 percent and heating and hot water by 1.9 percent. In contrast, electricity became 11.6 percent cheaper and natural gas 5.6 percent cheaper. Overall, goods prices rose by 1.1 percent in April, while services became 4.8 percent more expensive. Central bank remains cautious "Although oil prices have continued to rise, their direct impact on overall inflation is likely to weaken, provided there is no further escalation in the Middle East," said analyst Jan Slabý from Ecovis, according to the news agency CTK. At the same time, he pointed out that higher fuel prices could gradually be reflected in the prices of goods and services, including food. Analysts surveyed by CTK expect a further rise in inflation in the second half of the year. However, they continue to expect average inflation of around 2.5 percent for the year as a whole. The Czech National Bank left the key interest rate at 3.5 percent at its most recent meeting. It is likely to remain cautious in the coming months. The Bank Council explained that its decision was made against the backdrop of extraordinary uncertainty in connection with developments in the Middle East. It had examined various scenarios for inflation and real economic development and had come to the conclusion that monetary policy would have to remain relatively tight for the time being. The post Czech inflation confirmed at 2.5 percent appeared first on ostwirtschaft.de.