As summer draws close, Czech economists are cautiously optimistic about the country’s economic outlook. According to analysts surveyed by the Czech News Agency (ČTK) and forecasts from the Czech National Bank (ČNB), year-on-year inflation in August likely decelerated, approaching the 2% mark – and possibly dipping below it for the first time this year.
However, experts warn that this estimate is subject to a degree of uncertainty, primarily due to fluctuating food prices. The Czech Statistical Office (ČSÚ) will release the official August inflation figures on Tuesday, which will provide a clearer picture of the economic landscape.
Vít Hradil, chief economist at Cyrrus, paints a nuanced picture of August’s economic trends. “Compared to the previous month, we saw declining fuel, clothing, and footwear prices. Food prices likely also inched downward,” he explains. Conversely, categories such as recreation, culture, dining, and accommodation increased prices. Housing and household equipment prices are expected to remain relatively stable.
Hradil’s overall assessment is cautiously optimistic. “We estimate the month-on-month price level increase at a mere 0.05 percent, which would translate to an inflation rate of exactly 2 percent year-on-year – right on the central bank’s target,” he notes.
Analysts at Raiffeisenbank are even more optimistic, projecting that year-on-year inflation in August fell from 2.2% to 1.9%. They attribute this positive trend partly to declining fuel prices, which have benefitted inflation for the first time in a while. Food prices are estimated to have decreased similarly to July, though a more significant drop isn’t ruled out.
The ČNB and other experts anticipate a slight uptick in inflation come September, with projections hovering around 2.2% year-on-year. This expected increase is attributed to a lower comparison base and the declining food prices observed at the end of last year.
These latest inflation projections offer hope as the Czech Republic continues to navigate its economic recovery. After grappling with double-digit inflation in 2022 and 2023, the country has significantly improved since January. While challenges remain, the current trends suggest a stabilizing economic environment, inching closer to the central bank’s ideal target.