The CNB comments on the March 2016 inflation figures
Inflation comes in significantly below the CNB forecast in March
According to figures released today, the price level increased by 0.3% year on year in March 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 0.1% year on year in March. Inflation is thus still well below the CNB’s target, or below the lower boundary of the tolerance band around the target.
Annual headline inflation was 0.6 percentage point lower in March than forecasted by the CNB. In particular, food price inflation was markedly lower than forecasted, recording a deeper year-on-year decline in March, whereas the forecast had predicted accelerating year-on-year growth in food prices. Adjusted inflation excluding fuels was also lower than expected. However, this indicator of core inflation remains above 1%, reflecting the effect of the growing domestic economy and accelerating wage growth. The year-on-year decrease in fuel prices was also somewhat more pronounced in March than expected. By contrast, administered prices saw a year-on-year increase in March, whereas the forecast had predicted a slight annual decrease. This reflected mainly higher-than-expected growth in electricity prices and a more moderate drop in natural gas prices. The impacts of indirect tax changes were in line with the forecast.
The released figures represent an anti-inflationary risk to the CNB’s current forecast. According to the forecast, annual headline inflation will gradually increase, hitting the 2% target in the first half of next year and then moving slightly above it. The increase in inflation will be fostered by domestic cost pressures related in particular to accelerating wage growth amid continued growth in economic activity. At the same time, the anti-inflationary effect of import prices, which are currently falling sharply due to a fall in producer prices in the euro area and a previous decrease in global oil prices, will fade gradually.
Tomáš Holub, Executive Director, Monetary Department
The CNB comments on the March 2016 inflation figures
Inflation comes in significantly below the CNB forecast in March
According to figures released today, the price level increased by 0.3% year on year in March 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 0.1% year on year in March. Inflation is thus still well below the CNB’s target, or below the lower boundary of the tolerance band around the target.
Annual headline inflation was 0.6 percentage point lower in March than forecasted by the CNB. In particular, food price inflation was markedly lower than forecasted, recording a deeper year-on-year decline in March, whereas the forecast had predicted accelerating year-on-year growth in food prices. Adjusted inflation excluding fuels was also lower than expected. However, this indicator of core inflation remains above 1%, reflecting the effect of the growing domestic economy and accelerating wage growth. The year-on-year decrease in fuel prices was also somewhat more pronounced in March than expected. By contrast, administered prices saw a year-on-year increase in March, whereas the forecast had predicted a slight annual decrease. This reflected mainly higher-than-expected growth in electricity prices and a more moderate drop in natural gas prices. The impacts of indirect tax changes were in line with the forecast.
The released figures represent an anti-inflationary risk to the CNB’s current forecast. According to the forecast, annual headline inflation will gradually increase, hitting the 2% target in the first half of next year and then moving slightly above it. The increase in inflation will be fostered by domestic cost pressures related in particular to accelerating wage growth amid continued growth in economic activity. At the same time, the anti-inflationary effect of import prices, which are currently falling sharply due to a fall in producer prices in the euro area and a previous decrease in global oil prices, will fade gradually.
Tomáš Holub, Executive Director, Monetary Department