Česká národní banka

The CNB comments on the October 2017 inflation figures

9 Nov 2017

Inflation fully in line with the CNB’s forecast in October 2017

According to figures released today, the price level increased by 2.9% year on year in October 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 3% year on year in October.

Inflation was thus in line with the CNB’s forecast in October. This is true not only of the overall figure, but also of the individual components of inflation.

The published data thus bear out the message of the CNB’s forecast. According to the forecast, inflation will stay above the 2% target, though within its tolerance band, for the rest of this year and most of next year. The overall inflation pressures are currently peaking, reflecting accelerating wage growth amid robust growth of the domestic economy. Growth in domestic costs will record a further short-term increase owing to labour market tightness. The domestic inflation pressures will then moderate, aided by a stabilising effect of monetary policy. However, they will continue to outweigh the anti-inflationary effect of import prices. Their decline will reflect a strengthening koruna amid a temporary weakening of foreign producer price inflation. At the same time, the one-off factors that increased inflation at the start of this year will subside. Inflation will thus return to the 2% target from above over the monetary policy horizon, i.e. in late 2018 and early 2019.

Tomáš Holub, Executive Director, Monetary Department