Czech Inflation Reaches 17.5 Percent

Inflation in Czechia reached 17.5 percent year-on-year in July, up from 17.2 percent the previous month, according to official data published on Wednesday.

The price of foodstuffs and energy increased the most. Compared to June, prices rose 1.3 percent, which was the mildest month-on-month increase since February.

Prices of electricity and natural gas rose by 33.6 percent and 59.8 percent, respectively.

In the housing section, prices of electricity rose by about a third, natural gas by 59.8 percent and solid fuels by 41.1 percent. The annual growth of fuel and oil prices was lower than in June, rising by 43.6 percent.

Prices of rents rose by almost five percent, water by 5.3 percent and sewage by 6.4 percent. Heat and hot water rose by almost a fifth.

The Czech economy is facing a combination of exceptionally strong inflation pressures causing escalating broad-based price growth. Inflation in the domestic economy continues to hit new long-term highs in rapid succession.

Consumer prices are being pushed up by rising costs, reflecting domestic and foreign factors, including higher energy prices, and growth in the margins of domestic producers, retailers and service providers amid a still solid income situation of households.

Inflation will peak at just over 20% in late summer and early autumn 2022. It will then start to fall as growth in production costs slackens, the purchasing power of households drops and the stabilising effect of monetary policy manifests itself through domestic demand.

The downward trend in inflation will gain strength in the course of next year. Inflation will decline close to the CNB’s 2% target over the monetary policy horizon, which for this forecast lies in the first half of 2024.