Czech Republic Topped EU: Highest Inflation Rate

The Czech Republic leads the European Union (EU) with the highest inflation rate. According to Eurostat, the Union’s statistical office, the prices in the Czech Republic increased by eight percent year-on-year in November. This contrasts the average inflation rate in EU countries, which dropped to a two-year low of 3.1 percent.

The inflation rate in the Czech Republic is even higher than in Hungary, which held the top spot in the Union for the longest time. Currently, Hungary’s inflation is at 7.7 percent. In Poland, the consumer price growth rate remained at 6.3 percent in October, while in Slovakia, it decreased to 6.9 percent. Interestingly, Belgium is experiencing deflation, with prices falling by 0.8 percent year-on-year in November.

The Czech Statistical Office methodology shows that consumer prices in the Czech Republic increased by 7.3 percent year-on-year in November. Thus, inflation decreased from 8.5 percent in October. The rate also softened according to Eurostat methodology, which reported a 9.5 percent year-on-year price increase for the Czech Republic in October.

However, the calculation for the Czech Republic is somewhat skewed due to a government-saving energy tariff that was included in the total inflation last year as an electricity discount. Without this influence, inflation would be lower. Lukáš Kovanda, the chief economist of Trinity Bank, explains, “The saving tariff artificially lowered energy prices for households in the last quarter of last year, as the state took over the payment for their part. This led to a lowering of the base of this year’s year-on-year comparison, so due to this statistical effect, year-on-year inflation was artificially increased again this November.”

Analysts now report a positive trend: producer prices are falling, and consumer inflation is easing in most EU countries. In November, the lowest inflation rate in the EU countries after Belgium was in Denmark, where it was 0.3 percent. The third-best was Italy, where prices increased year-on-year by 0.6 percent. Compared to October, the inflation rate eased in 21 of the 27 member states, remained unchanged, and raised in three.