Česká národní banka


CNB comments in previous years

The CNB comments on the September 2017 inflation figures

9 Oct 2017

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

According to figures released today, the price level increased by 2.7% year on year in September 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 2.8% year on year in September.

Annual headline inflation was fully in line the CNB’s forecast in September. Owing to higher global oil prices, fuel prices – which rose in year-on-year terms – were higher in September than the CNB’s forecast, which had predicted a slight year-on-year decrease. Conversely, as in August, growth in food prices lagged somewhat behind the CNB’s expectations in September. Core inflation was almost in line with the CNB’s forecast in September. Its gradual rise reflects faster growth of the domestic economy and wages. Administered prices and the effects of changes to indirect taxes were also in line with the forecast in September.

The published data 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 remainder of this year. Inflation pressures are currently peaking, reflecting accelerating growth in wages and economic activity. These domestic fundamental factors primarily affect core inflation. 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. Moreover, the 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