In an unexpected turn of events, the Czech Republic’s inflation rate has climbed back above the 2% mark, reaching 2.4% in May – a 0.6 percentage point increase from April. According to preliminary estimates from the Czech Statistical Office, consumer prices rose by 0.5% month-over-month.
The surge was primarily driven by rising food, alcohol, and tobacco prices, which jumped by 4.8% year-over-year, up significantly from April’s 3.5% increase. Meanwhile, energy prices, including fuel costs, provided some relief by dropping 6.2%. The overall goods prices increased by 0.9%, while services continued their strong upward trajectory, showing a 4.9% rise compared to last May.
Analysts, including Miroslav Novák from Citfin, note that the May inflation increase exceeded expectations, with particular concern about accelerating service prices and core inflation. This development has significant implications for the Czech National Bank’s monetary policy, with interest rate cuts in June now seeming unlikely.
UniCredit Bank economist Patrik Rožumberský points out that May’s inflation rate surpassed the Czech National Bank’s forecast by 0.1 percentage point.