The CNB comments on the September 2013 inflation figures
Inflation comes in significantly below the CNB forecast in September
According to figures released today, the price level increased by 1% year on year in September 2013. Annual headline inflation thus slowed further compared to August. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, also moderated in September, to 0.2%. This means it was well below the lower boundary of the tolerance band around the CNB’s target.
Annual headline inflation was 0.4 percentage point lower than the CNB’s current forecast in September. The lower-than-forecasted annual inflation was due in almost equal measure to administered prices, more negative adjusted inflation excluding fuels, and food prices. The downward surprise was therefore spread across most of the consumer basket. Fuel prices were virtually in line with the CNB forecast in September, as were the effects of changes to indirect taxes.
The released figures – together with a falling outlook for administered prices next year – point to increasing downside risks to the CNB’s current inflation forecast. The forecast expects headline inflation to be below the CNB’s 2% target this year despite the substantial impact of tax changes and to decline further at the start of next year after these tax effects unwind. Monetary-policy relevant inflation will be below the lower boundary of the tolerance band this year and then return slowly towards the target over the monetary policy horizon. From the qualitative point of view, the message of the CNB’s current forecast regarding the significant anti-inflationary effect of the domestic economy is confirmed. At the same time, food prices, administered prices and indirect tax changes are still sources of inflation, although their effect should weaken; the effect of administered prices and food prices has so far been weakening to a greater degree than expected. The previous depreciation of the koruna is thus the only factor acting against a slowdown in inflation.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the September 2013 inflation figures
Inflation comes in significantly below the CNB forecast in September
According to figures released today, the price level increased by 1% year on year in September 2013. Annual headline inflation thus slowed further compared to August. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, also moderated in September, to 0.2%. This means it was well below the lower boundary of the tolerance band around the CNB’s target.
Annual headline inflation was 0.4 percentage point lower than the CNB’s current forecast in September. The lower-than-forecasted annual inflation was due in almost equal measure to administered prices, more negative adjusted inflation excluding fuels, and food prices. The downward surprise was therefore spread across most of the consumer basket. Fuel prices were virtually in line with the CNB forecast in September, as were the effects of changes to indirect taxes.
The released figures – together with a falling outlook for administered prices next year – point to increasing downside risks to the CNB’s current inflation forecast. The forecast expects headline inflation to be below the CNB’s 2% target this year despite the substantial impact of tax changes and to decline further at the start of next year after these tax effects unwind. Monetary-policy relevant inflation will be below the lower boundary of the tolerance band this year and then return slowly towards the target over the monetary policy horizon. From the qualitative point of view, the message of the CNB’s current forecast regarding the significant anti-inflationary effect of the domestic economy is confirmed. At the same time, food prices, administered prices and indirect tax changes are still sources of inflation, although their effect should weaken; the effect of administered prices and food prices has so far been weakening to a greater degree than expected. The previous depreciation of the koruna is thus the only factor acting against a slowdown in inflation.
Tomáš Holub, Executive Director, Monetary and Statistics Department