Inflation Slows Down in May

The Czech Republic’s inflation rate has slowed down. In May, the year-on-year inflation rate reached 2.6 percent, 0.3 percentage points less than in April. Although analysts had expected an increase, the month-on-month inflation rate did not change. The Czech Statistical Office (CSÚ) released the data on Tuesday.

The slowdown in the year-on-year inflation growth rate was mainly due to food prices, which decreased more than in April. For example, flour and eggs have become almost a quarter cheaper, fruit nearly seven percent cheaper, and meat nearly six percent cheaper. On the other hand, prices in the housing segment, such as rent, were about seven percent higher year-on-year. For water, sewage, or electricity, the increase exceeded ten percent. The only price that fell year-on-year was natural gas (-6.6 percent).

Fuel prices have risen significantly, almost by 11 percent, compared with last year. Accommodation services were also more than a tenth more expensive, while catering services jumped by 7.5 percent. As a trend, prices are growing more annually in services (+5.3 percent) than in goods (+0.9 percent).

Compared to April, the price level did not change. “In most sections of the consumer basket, only insignificant price movements were recorded, which compensated each other,” said Pavla Šedivá, head of the CSÚ consumer price statistics department. While goods prices fell by 0.2 percent month-on-month, service prices increased by the same amount.

The main economist of Creditas Bank, Petr Dufek, pointed out the significant price increases in services. “Prices in hotels and restaurants are still rising briskly, and they are enjoying higher interest from domestic and foreign visitors this year. The idea that service inflation will be curbed despite strong demand seems bold. In the past three years alone, accommodation and catering prices have already increased by more than 50 percent,” he noted.