< /p> Year-on-year inflation in the Czech Republic slowed to 16.7 percent in February
Prague – Year-on-year growth in consumer prices in the Czech Republic slowed from 17.5 percent in January to 16.7 percent this February. This was announced today by the Czech Statistical Office (ČSÚ). According to statistics, the slowdown in inflation was mainly due to the easing of housing price growth. For example, it slowed down the growth of electricity and gas prices. Month-on-month inflation fell even more significantly than year-on-year. While prices rose by six percent month-on-month in January, in February they only increased by 0.6 percent.
The slowdown in year-on-year inflation compared to January by 0.8 percentage points corresponds to the assumptions of analysts, who expected an easing of half to one percentage point. “The slowdown was recorded in half of the sections of the consumer basket. For example, fuel prices have been reducing their influence on the year-on-year index since last July,” said Pavla Šedivá, head of the consumer price statistics department of the CZSO.
The biggest influence on the development of the price level according to statistics, housing prices continued to rise in February. Overall, in February the year-on-year growth in housing, water, energy and fuel prices slowed from January's 24.3 percent to 22.2 percent. For example, electricity prices moderated growth from 36.4 to 32 percent and natural gas prices from 87 to 74.3 percent. However, according to the CZSO, the drop in year-on-year energy inflation was partly influenced by the month-on-month increase in energy prices in February 2022.
In February, apartment rent prices rose year-on-year by 6.5 percent, products and services for routine apartment maintenance by 18.4 percent, water by 16.3 percent, sewage by 30.3 percent, solid fuels by 55.6 percent and heat and hot water by 45.6 percent.
The prices of food and non-alcoholic beverages also had an impact on overall inflation, the year-on-year growth of which moderated in February from 24.8 percent in January to 23.9 percent. In February, the prices of rice rose by 31.9 percent, flour by 36.1 percent, pork by 31.1 percent, semi-skimmed shelf life milk by 39.5 percent, eggs by 95.2 percent, margarine and other vegetable fats by 39, 8 percent and sugar by 75.1 percent.
The prices of goods as a whole in February rose by 19.7 percent and the prices of services by 11.9 percent. For example, in catering and accommodation, the prices of catering services were higher by 23 percent and the prices of accommodation services by 20.1 percent. Prices for holidays with comprehensive services rose by 20.9 percent.
In a month-on-month comparison, the prices of goods increased by 0.5 percent and the prices of services by 0.6 percent. Among food and beverages, the price of vegetables in particular rose by 12.7 percent compared to January. However, the prices of pork fell by 6.1 percent and butter by 12.3 percent. In the area of housing, natural gas became cheaper by 1.6 percent.
Inflationary pressures in the Czech economy are only slowly fading, analysts agree
Inflationary pressures in the Czech economy are only slowly fading away, so far the increase in the comparative base of prices from last year is particularly evident. Analysts agree on this in their assessment of the February inflation data published today. According to the Czech Statistical Office (ČSÚ), year-on-year price growth slowed to 16.7 percent from January's 17.5 percent. Analysts expect inflation to drop to single digits in the middle of the year or in the third quarter.
“This year's inflation figures so far indicate that inflationary pressures are fading relatively slowly, and a large part of the drop in year-on-year inflation is mainly driven by the statistical effect of a higher comparative base, or the drop in some prices is being replaced by growth in other price ranges,” said Jakub Seidler, Chief Economist of the Czech Banking Association .
The Chief Economist of Banka Creditas Petr Dufek assesses the slowdown in inflation compared to January as a cosmetic change. “Its decline is mainly due to the high comparative basis from last year, because there can't be much talk of a reduction in the prices of goods and services yet,” he says. He drew attention to the continuing increase in the price of food and home furnishings. “Although we have a strong koruna here, which should make imported goods cheaper, and maritime tariffs have fallen to pre-Covid levels, the prices of goods continue to rise,” he said.
According to Daniel Janeček from strategic consultancy PwC, the new data confirm that the Czech Republic will not get rid of double-digit inflation anytime soon. “For companies, the current situation means several negative factors – increasingly expensive inputs, more difficult financing and pressure from employees and trade unions for rapid wage growth. And it is this that can support the further spiraling of the inflationary spiral,” he warned.
Most analysts but expects a slowdown in price growth in the coming months. “For the next months, we assume that the disinflationary trend will intensify. Already in March, inflation could decrease by up to two percentage points,” says UniCredit Bank economist Patrik Rožumberský. He expects single-digit inflation in June.
“Total year-on-year inflation will continue to decline in the following months and will reach below the level of ten percent, i.e. in the single-digit region, in June or during the third quarter of this year at the latest. At the end of this year, total year-on-year inflation could fall below seven percent,” agrees Generali Investments CEE Chief Economist Radomír Jáč.
“This year, and probably not even next year, it will not reach the CNB's target of two percent. We expect inflation for the whole of 2023 an average of 11.9 percent, so it will reach double-digit values for the second year in a row. At the beginning of next year, inflation should be around four to five percent,” said Deloitte economist Václav Franče.