Česká národní banka


CNB comments in previous years

The CNB comments on the July 2017 inflation figures

9 Aug 2017

Inflation in line with the CNB’s forecast in July 2017

According to figures released today, the price level increased by 2.5% year on year in July 2017. Inflation thus remains in the upper half of the tolerance band around the CNB’s 2% target. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 2.6% year on year in July.

Annual headline inflation was in line with the CNB’s forecast in July, with only negligible deviations from the forecast within the structure of inflation.

The published figures thus bear out the message of the CNB’s current forecast. According to the forecast, inflation will remain in the upper half of the tolerance band around the CNB’s target in the second half of this year. Inflation pressures are currently peaking, reflecting accelerating growth in wages and economic activity. Growth in domestic costs will slow in the period ahead due to rising labour productivity growth, which will increasingly offset the impact of faster growth in wages and economic activity. The current already only slightly inflationary effect of import prices will quickly turn anti-inflationary. This will reflect subdued foreign producer price inflation and a strengthening koruna. Inflation will thus decrease towards the Czech National Bank’s 2% target in early 2018 and will be slightly below it over the monetary policy horizon, i.e. in 2018 Q3 and Q4. Core inflation will be stable, fluctuating around 2%.

Tomáš Holub, Executive Director, Monetary Department