In a surprising turn of events, the Czech Republic’s inflation rate remained unchanged at 2.2% year-on-year in August, matching July’s figures, according to the latest report from the Czech Statistical Office. This stability comes despite analysts’ expectations of a slowdown towards the 2% mark.
While fuel prices have seen a decrease of about 4% compared to last August, the deceleration in food price deflation has been a key factor in maintaining the current inflation rate. For instance, milk, cheese, and eggs saw a price drop of just under 4% in August, a significant slowdown from the 7% decrease observed in July.
However, not all food items followed this trend. Butter prices surged by 22.4% year-on-year, while chocolate saw an 18.6% increase. The hospitality sector also contributed to inflationary pressures, with restaurant prices climbing 6.8% and hotel rates jumping 8.5% compared to the previous year.
Petr Dufek, an economist at Creditas, highlighted two noteworthy trends. First, the waning effect of cheaper food prices, which are no longer curbing inflation as significantly as they did earlier in the year. Second, the persistent price hikes in restaurants and hotels, suggesting consumers’ continued willingness to absorb these increases.
Looking ahead, Daniel Janeček from PwC predicts a relatively stable inflation trajectory for the rest of the year, hovering around the central bank’s 2% target. This stability could potentially pave the way for the Czech National Bank to consider another interest rate cut at its next monetary policy meeting.