Czech Republic’s Inflation Rate Dips Below 10 Percent

According to analysts, the Czech Republic’s inflation rate has dipped below 10 percent for the first time since January 2022. The pace of consumer price growth slowed in June, attributed to lower demand and a strong koruna. Additionally, the comparative base from last year contributes to the decrease in inflation. In May, inflation was at 11.1 percent. Czech Statistical Office (ČSÚ) data on June’s inflation will be released on Thursday.

Analysts at Raiffeisenbank estimate year-on-year inflation for June to be at 9.7 percent. They attribute the deflationary process primarily to decreasing prices of fuels, which were more than 20 percent lower in year-on-year comparison. The reason for this is the high comparative base from last year when fuel prices reached their historical maxima during the summer. Regulated prices are expected to drop due to the decrease in electricity and gas prices on the stock exchange and the effect of the government ceiling. However, according to analysts, food prices contribute to the continuation of high inflation.

Compared to May, there was probably another slight increase in food prices in June, and with the arrival of the tourist season, recreation prices have likely gone up as well. Prices of food service, accommodation, clothing, and footwear are likely to continue increasing. On the other hand, there should be some calming in the housing category, where prices could drop slightly. Prices of fuels and household equipment are expected to stagnate, which will neutrally impact inflation. According to the chief economist of Cyrrus, Vít Hradil, the price level rose by 0.4 percent compared to May, which would mean a year-on-year inflation rate of 9.8 percent.

According to analysts at Česká spořitelna, year-on-year inflation in June was 9.8 percent. Alongside the impact of the comparative base, there are several deflationary factors, including decreased household consumption, falling energy, fuel, and real estate prices. The strong Koruna is also weakening inflation. The growth in food prices is milder, although uncertainty about their future development remains significant and two-sided.

Analysts at Česká spořitelna expect a further easing inflation in the coming months. They expect it to drop to 8.6 percent in July and 8.2 percent in August. They predict that the pace of price growth will reach three percent at the beginning of next year.

The Czech Republic’s inflation rate has been a topic of concern for some time now, reaching a peak of 17.3 percent in October 2021. The dip below 10 percent is a positive sign for the country’s economy and citizens. It is hoped that decreasing inflation will continue in the coming months, providing relief to consumers and businesses.