The CNB comments on the May 2012 inflation figures
Inflation comes in slightly below the CNB forecast in May 2012
According to figures released today, the price level increased by 3.2% year on year in May 2012. Annual headline inflation thus declined further compared to April. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, fell to 2% in May, standing exactly at the level of the inflation target.
Annual headline inflation was 0.2 percentage point lower in May than the CNB’s current forecast. The downward deviation from the forecast was due mainly to lower-than-expected annual growth in food prices, although the difference from the forecast in this segment was much smaller in May than in the previous month. This confirms the CNB’s assumption that the drop in food prices that unexpectedly occurred in April would be partly offset in the following months in terms of the deviation from the forecast. To a lesser extent, fuel prices and administered prices fostered lower inflation in May. By contrast, adjusted inflation excluding fuels was slightly above the CNB’s forecast in May, although it remained slightly negative.
The published data confirm the message of the CNB’s current forecast regarding the anti-inflationary effect of the domestic economy. The recent rise in inflation was due to a combination of several one-off factors, in particular the VAT change, growth in food prices and administered prices and the gradual pass-through of the earlier exchange rate depreciation to prices. According to the forecast, headline inflation will be close to the current elevated levels in the rest of 2012 as a result of the VAT increase. Monetary-policy relevant inflation will be significantly lower than headline inflation throughout 2012 owing to the aforementioned tax change. Both headline and monetary-policy relevant inflation will fall slightly below the target next year according to the baseline scenario of the forecast.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the May 2012 inflation figures
Inflation comes in slightly below the CNB forecast in May 2012
According to figures released today, the price level increased by 3.2% year on year in May 2012. Annual headline inflation thus declined further compared to April. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, fell to 2% in May, standing exactly at the level of the inflation target.
Annual headline inflation was 0.2 percentage point lower in May than the CNB’s current forecast. The downward deviation from the forecast was due mainly to lower-than-expected annual growth in food prices, although the difference from the forecast in this segment was much smaller in May than in the previous month. This confirms the CNB’s assumption that the drop in food prices that unexpectedly occurred in April would be partly offset in the following months in terms of the deviation from the forecast. To a lesser extent, fuel prices and administered prices fostered lower inflation in May. By contrast, adjusted inflation excluding fuels was slightly above the CNB’s forecast in May, although it remained slightly negative.
The published data confirm the message of the CNB’s current forecast regarding the anti-inflationary effect of the domestic economy. The recent rise in inflation was due to a combination of several one-off factors, in particular the VAT change, growth in food prices and administered prices and the gradual pass-through of the earlier exchange rate depreciation to prices. According to the forecast, headline inflation will be close to the current elevated levels in the rest of 2012 as a result of the VAT increase. Monetary-policy relevant inflation will be significantly lower than headline inflation throughout 2012 owing to the aforementioned tax change. Both headline and monetary-policy relevant inflation will fall slightly below the target next year according to the baseline scenario of the forecast.
Tomáš Holub, Executive Director, Monetary and Statistics Department