Czech inflation will jump to 9.2% in January and 9.6% in February as the expiration of a tax break and repricing by suppliers raises energy prices, adding to domestic price pressures, central bank analysts said on Monday. The Czech central bank has been the most aggressive in central Europe in responding to price spikes driven by international energy prices and logistics bottlenecks, but also domestic demand and economic recovery amid a very tight labour market. The bank raised its benchmark repo rate to 3.75% from 0.25% in mid-2021, and is expected to tighten further when the board meets on Feb. 3, in an attempt to convince the public that inflation will get back toward its 2% target by early next year. A large factor in the January inflation jump is the expiration of a two-month value-added tax break on energy which expired in December, Dana Hajkova and Radek Snobl wrote in a blog post on the bank’s website. “Together with the growth in heating prices and other items, regulated prices will jump in January, according to current estimates, from December’s -2.9% to 13%, which in itself will accelerate year-on-year inflation versus December by 2.2 percentage points,” they wrote. “In the...
The new government of the Czech Republic won a vote of confidence in parliament on Thursday.
'Czechs have already driven their Babiš out. I sincerely hope that Hungarians will manage to do it as well,' said Markéta Pekarová Adamová.
Czech inflation accelerated at the end of 2021 but the focus of investors has already shifted to the start of this year when consumer prices are expected to rise at the faster pace in over two decades. The annual inflation rate rose to 6.6% in December, from 6% in the previous month, data from Czech Statistics Office showed Wednesday. The last time the country experienced such rapid inflation was in September 2008. The average rate of inflation for the whole of 2021 was 3.8 percent. This was also the highest seen since 2008. Three central bank board members said this week that price growth may approach 10% in early 2022 before it starts slowing later in the year. The central bank has pledged to continue with one of the European Union’s most aggressive campaigns of interest-rate increases, after lifting borrowing costs by a cumulative 3.5 percentage points since June. The biggest contribution to annual December inflation came from cost of transportation and housing. While commodity prices and supply-chain problems are among key price drivers, the central bank says its monetary-policy tightening is aimed at preventing current high inflation from becoming a long-term phenomenon The Czech Republic has the lowest jobless...
Prime Minister Petr Fiala’s (ODS) government has published a program statement setting out its priorities, such as stabilizing public finances and orienting the state towards the European Union and NATO. It also includes pension reform, education, environmental protection, digitalization of the public administration and support for the free market, science and research, and housing. Mr. Fiala added that the declaration also takes into account current topics such as the pandemic or investment in sustainable development on the basis of the Green Deal. The aim is to ensure the energy self-sufficiency of the Czech Republic. The new center-right government will seek to lay the ground for a possible phasing out of coal by 2033, while also supporting nuclear power as part of its energy future. Other plans aim at simplifying life for businesses, something to be expected from a centre-right government. Though Finance Minister Zbyněk Stanjura (Civic Democrats) presented some changes to the taxation system, he has avoided wider reforms. The program does not mention concrete steps to fight inflation, public debt, or the budgetary deficit, the highest ever in 2021. The government wants to continue developing a strategic partnership with Israel and that cooperation in Visegrad, which has been united...
Ivan Bartoš was re-elected chairman of the Czech Pirate Party by its national forum for another two years.
Many things happened in 2021, and there is probably no one who was not affected by the events of the year in any way. I would like to look back at the situation in the real estate and mortgage markets and follow up with the coming changes. – by Světlana Lanza, Finance specialist at M&M finance The beginning of the year was marked by the pandemic uncertainty, which increased the volume of interest in people looking to invest in the real estate market – by using their savings that were sitting in a common savings account losing value due to inflation. Low-interest rates, which were usually below 2 %, also contributed to people becoming more interested in real estate. It was predicted that there would be a decline in interest in real estate during this time, however, this did not happen. Therefore, due to the high demand in real estate – prices have risen. Today, auctions are a common practice where the highest bidder wins. We have recorded a huge demand for real estate and mortgages. In the middle of the year, the banks had already met their annual targets. Mortgage processing became slower and we had to wait longer than...
Czech PM Petr Fiala has commented on the country’s lower wage growth, the nuclear alliance with France and the ongoing search for President Miloš Zeman’s successor in an interview with Seznam Zprávy. Fiala discussed at length his efforts to get on with President Zeman despite their clear political differences and expressed his desire for the country’s governing parties to find a common candidate for Zeman’s successor. “I think the public rightly expects me to be able to talk to Miloš Zeman, even though we each represent different voters and different views, and that’s how it should be in a democracy. These people must be able to talk to each other, or the state won’t work,” Fiala told the media outlet. Fiala refused to name anyone specifically for the presidential role but expressed the need for any viable candidate to have significant public political experience. “We need a personality who respects the nature of parliamentary democracy and the constitution. I would like someone who will unite society rather than agitate it with different opinions.” He stated that his government took office at the most difficult moment in the history of the independent Czech Republic, acknowledging that he and his ministers must find...
The Czech central state budget showed a 419.7 billion crown deficit at the end of 2021, Finance Ministry data showed on Thursday. It is the largest deficit in the modern history of the Czech Republic, surpassing the CZK 367.4 billion deficit registered in 2020. However, it is still below the CZK 500 billion ceiling approved by Parliament. Adjusted for funds from the EU, the end-December budget would show a deficit of 408.4 billion crowns, versus 364.9 billion crowns deficit in the previous year. Overall expenditure rose 3.5% while income was up 0.8% in 2021. Since the start of the year, the Czech Republic has been on a provisional budget, which is expected to last until the end of March. This is because the Chamber of Deputies failed to approve the draft state budget for 2022 by the end of last year. The central budget is the main part of the EU country’s overall public sector finances, which also include local and regional administrations, the health insurance system and various off-budget funds. The ministry has forecast the 2021 public sector deficit at 7.2% of gross domestic product. For 2022, the public gap is estimated at 4.4% of GDP.
The Czech crown hit its highest level since 2012, gaining in new year trading from higher interest rates and data showing stronger manufacturing sentiment. The Czech crown added 0.32% and was trading at 24.820 to the euro after earlier breaking the key level of 24.774 and rising to its strongest since October 2012. The currency has been steadily firming since a hefty interest rate hike on Dec. 22. “The market is rather illiquid today, but it can be expected to further strengthen, as it usually happens at the start of a year, that ‘missed train syndrome’ that some may want to jump on,” an FX trader in Prague said. PMI data published in the Czech Republic also showed growth with output and orders rising the most in months, although supply snags and rising prices spelled uncertainty for the year ahead. At its pre-Christmas meeting, the central bank raised the key interest rate by one percentage point to 3.75 percent, trying to dampen expectations that consumer prices will continue to rise rapidly. The CNB’s key interest rate is thus the highest since 2008. The koruna reacted to the increase in interest rates by strengthening between the holidays. On Tuesday, December 28,...
The Czech Republic will seek to use its European Union presidency in the second half of 2022 to build stronger links with the bloc’s mainstream members, counterbalancing ties with traditional regional allies Poland and Hungary that are in conflict with Brussels. “We have a system in place for pretty close cooperation with our counterparts in the Visegrad Group” that also includes Hungary, Poland and Slovakia, Czech Minister for European Affairs Mikulas Bek said in an interview Monday. “That’s good and it has been productive for us but we need to reach beyond that and create something similar with other countries too.” The Czech Republic sides with the EU against Poland and Hungary on issues ranging from the treatment of LGBTQ communities to the independence of the Polish judiciary, said Bek. “Our position in their rule of law stand-off with the European Union will definitely be different to theirs,” he said. Led by Petr Fiala, the new administration has pledged to continue cooperation with the Visegrad Four group founded in 1991 by the Czech Republic, Slovakia, Hungary and Poland to promote their entry to the EU and NATO. The Czech Republic could ally with Germany, its biggest trading partner, and Austria...
2022 will be one of the most difficult in the country’s modern history, Prime Minister Petr Fiala told Czechs in his New Year’s address to the nation. “Unfortunately, I do not have much good news. This year will probably be one of the most difficult since the establishment of the independent Czech Republic,” said Fiala. Energy prices, inflation and covid are three serious dangers that the Czech Republic will face this year. After winning the elections to the Chamber of Deputies, Fiala formed a government of representatives of the ODS, KDU-ČSL, TOP 09, Pirates and STAN, which replaced the minority cabinet of Andrej Babiš. “The previous government paid little attention to our future. And it literally lived from day to day,” said the Prime Minister. “Postponing problems to the next term is always easier than biting into a sour apple and starting to solve them. But our country has no choice because every day our problems will only get worse,” he added. “We inherited a huge deficit but I promise that we will look for savings, especially where they don’t affect directly our citizens,” he continued. As regards the country’s economic situation, he said that would take time to heal,...
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