The CNB comments on the January 2016 inflation figures
Inflation comes in slightly below CNB forecast in January
According to figures released today, the price level increased by 0.6% year on year in January 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 0.5% year on year in January. Inflation is thus still well below the CNB’s target, or below the lower boundary of the tolerance band around the target, despite the January increase.
Annual headline inflation was 0.1 percentage point lower in January than forecasted by the CNB. Food price inflation and adjusted inflation excluding fuels were lower compared to the forecast, whereas growth in administer prices was higher. Food prices (including beverages and tobacco but excluding the effects of changes to indirect taxes) continued to decline modestly year on year in January, whereas the forecast had predicted renewed growth. Adjusted inflation excluding fuels slowed moderately in January, whereas the forecast had expected a further moderate acceleration. However, this indicator of core inflation remains above 1%, reflecting the effect of the growing domestic economy and accelerating wage growth. Administered prices grew faster than forecasted chiefly as a result of a smaller-than-expected drop in natural gas prices and higher growth in electricity prices. Fuel prices and the impacts of indirect tax changes were in line with the forecast.
The released figures represent only a small deviation from the CNB’s current forecast. According to the forecast, annual headline inflation will gradually increase, hitting the 2% target at the monetary policy horizon (i.e. in the first half of next year) and then moving slightly above it. Inflation will be affected 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 global oil prices, will fade gradually.
Tomáš Holub, Executive Director, Monetary Department
The CNB comments on the January 2016 inflation figures
Inflation comes in slightly below CNB forecast in January
According to figures released today, the price level increased by 0.6% year on year in January 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 0.5% year on year in January. Inflation is thus still well below the CNB’s target, or below the lower boundary of the tolerance band around the target, despite the January increase.
Annual headline inflation was 0.1 percentage point lower in January than forecasted by the CNB. Food price inflation and adjusted inflation excluding fuels were lower compared to the forecast, whereas growth in administer prices was higher. Food prices (including beverages and tobacco but excluding the effects of changes to indirect taxes) continued to decline modestly year on year in January, whereas the forecast had predicted renewed growth. Adjusted inflation excluding fuels slowed moderately in January, whereas the forecast had expected a further moderate acceleration. However, this indicator of core inflation remains above 1%, reflecting the effect of the growing domestic economy and accelerating wage growth. Administered prices grew faster than forecasted chiefly as a result of a smaller-than-expected drop in natural gas prices and higher growth in electricity prices. Fuel prices and the impacts of indirect tax changes were in line with the forecast.
The released figures represent only a small deviation from the CNB’s current forecast. According to the forecast, annual headline inflation will gradually increase, hitting the 2% target at the monetary policy horizon (i.e. in the first half of next year) and then moving slightly above it. Inflation will be affected 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 global oil prices, will fade gradually.
Tomáš Holub, Executive Director, Monetary Department