Česká národní banka


The CNB comments on the February 2019 inflation figures

11 Mar 2019

Inflation comes in slightly above CNB forecast in February 2019

According to figures released today, annual inflation accelerated to 2.7% in February 2019. Inflation thus increased further inside 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 also rose by 2.7% year on year in February 2019.

Inflation was 0.3 percentage point above the CNB’s forecast in February. Its deviation from the central bank’s prediction thus decreased compared to the previous month. The persisting deviation was again due mainly to higher core inflation. To a lesser extent, the higher-than-expected inflation in February was attributable to stronger year-on-year growth in food prices and administered prices. In line with the forecast, the year-on-year rise in fuel prices came to a halt in February. The first-round effects of changes to indirect taxes were also in line with the forecast in February.

The published figures represent an inflationary risk to the CNB’s current forecast. According to the forecast, the overall inflation pressures remain strong, owing mainly to rising wages and continued growth of the domestic economy. These factors are reflected primarily in core inflation. By contrast, the inflationary effect of import prices is weakening. According to the forecast, inflation will remain temporarily in the upper half of the tolerance band around the CNB’s target in the first half of this year. This will be due to core inflation and faster growth in food prices and administered prices. In the subsequent period, however, the overall inflation pressures will ease and inflation will slow. This will be due initially to an intensifying decline in import prices, reflecting renewed appreciation of the koruna and a fall in inflation abroad. In addition, domestic inflation pressures will start to weaken slowly as a result of gradually falling wage growth. This will cause inflation to stabilise very close to the CNB’s 2% target.

Petr Král, Executive Director, Monetary Department