Butter 38.8% Cheaper: Czech Inflation Rises to 1.9% Anyway

In August, butter cost 38.8% less in the Czech Republic than it did a year earlier. Long-life semi-skimmed milk fell in price by 24.6%, and pork by 23.7%, according to the Czech Statistical Office (ČSÚ). Overall consumer prices nevertheless rose by 1.9% compared to the previous year, up from 1.7% in July.

Fuel prices were the main driver of this increase. They rose by 26.2%, compared to 16.8% in July. Transportation costs overall were 9.6% higher than a year ago.

“Consumer prices accelerated their year-over-year rise to 1.9% in August. The sharp rise in fuel prices was partially offset by the decline in food prices. Diesel cost an average of 44.98 korunas per liter at gas stations in August, the highest level since October 2022,” said Pavla Sedivá, head of the Consumer Price Statistics Department at the ČSÚ.

44.98 Czech crowns are equivalent to approximately 1.85 euros. The Czech National Bank set the euro exchange rate at 24.315 crowns on September 16.

Food Prices Are Pulling the Index Down

The decline in food prices is widespread. Poultry cost 8.3% less than a year ago; in July, the decline was 2.9%. Cheese prices fell by 5.2%, while margarine and similar products dropped by 10.8%. Sausages and smoked meats shifted from a 1.5% increase in July to a 0.4% decrease in August.

On a month-over-month basis, a countertrend is evident. Long-life semi-skimmed milk rose by 20.3% compared to July, and butter by 5.3%. Fruit became 4.4% cheaper, potatoes 9.4%, and pork 3.1%.

Services Remain the Main Driver of Price Increases

Goods cost 0.2% more overall than a year ago, while services cost 4.5% more. Rents rose by 6.1%, lodging by 6.8%, and dining out by 3.9%. Electricity became 11.2% cheaper, and natural gas by 4.8%.

By European standards, the Czech Republic remains low. The harmonized index rose by 1.5%, following a 1.3% increase in July. In Germany, the rate was 2.9%, in Slovakia 3.1%, and in the eurozone 3.3%. The 12-month average inflation rate stood at 2.0%.

For German suppliers, this has two sides. Dairy and meat processors are facing falling shelf prices in the Czech retail market. Suppliers of butter, milk, or pork are negotiating against last year’s figures, which were significantly higher. Margins are coming under pressure. At the same time, inexpensive food products are easing the burden on households. The money freed up is flowing into other product categories, such as electronics and the restaurant industry. Those selling consumer goods to the Czech Republic are finding more room to maneuver. Expensive diesel, however, is having the opposite effect: freight forwarders are passing on the costs, making deliveries from Germany more expensive.

Sources: Český statistický úřad (CS/EN), Česká národní banka (CS/EN), Eurostat (EN).

SK, Frankfurt