The CNB comments on the July 2013 inflation figures
Inflation comes in below the CNB forecast in July
According to figures released today, the price level increased by 1.4% year on year in July 2013. Annual headline inflation thus slowed compared to June. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, also slowed in July, to 0.7%. This means it was below the lower boundary of the tolerance band around the CNB’s target.
Annual headline inflation was 0.3 percentage point lower in July than the CNB’s current forecast. The lower-than-forecast result was largely due to food prices and administered prices. With regard to food prices, a favourable harvest resulted in a larger-than-expected decrease in vegetable prices. Fruit prices declined as well, whereas the forecast had expected them to pick up slightly. Within administered prices, gas prices for households dropped unexpectedly by almost 3%. A slight downward deviation also occurred in adjusted inflation excluding fuels and in the first-round effects of tax changes owing to a slower pass-through of the harmonisation increase in excise duties on cigarettes. Fuel prices were in line with the forecast.
The published data confirm the message of the CNB’s current forecast regarding the anti-inflationary effect of the domestic economy. According to the forecast, the sources of inflation are still food prices, administered prices and indirect tax changes. However, growth in food prices should moderate. Import prices are inflationary, owing to the depreciation of the koruna. By contrast, the domestic economy is damping inflation. The CNB’s forecast expects headline inflation to be below the CNB’s 2% target this year despite the substantial impact of tax changes. Monetary-policy relevant inflation will be below the lower boundary of the tolerance band this year and then return slowly towards the target at the monetary policy horizon.
Petr Vojtíšek, Deputy Executive Director, Monetary and Statistics Department
The CNB comments on the July 2013 inflation figures
Inflation comes in below the CNB forecast in July
According to figures released today, the price level increased by 1.4% year on year in July 2013. Annual headline inflation thus slowed compared to June. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, also slowed in July, to 0.7%. This means it was below the lower boundary of the tolerance band around the CNB’s target.
Annual headline inflation was 0.3 percentage point lower in July than the CNB’s current forecast. The lower-than-forecast result was largely due to food prices and administered prices. With regard to food prices, a favourable harvest resulted in a larger-than-expected decrease in vegetable prices. Fruit prices declined as well, whereas the forecast had expected them to pick up slightly. Within administered prices, gas prices for households dropped unexpectedly by almost 3%. A slight downward deviation also occurred in adjusted inflation excluding fuels and in the first-round effects of tax changes owing to a slower pass-through of the harmonisation increase in excise duties on cigarettes. Fuel prices were in line with the forecast.
The published data confirm the message of the CNB’s current forecast regarding the anti-inflationary effect of the domestic economy. According to the forecast, the sources of inflation are still food prices, administered prices and indirect tax changes. However, growth in food prices should moderate. Import prices are inflationary, owing to the depreciation of the koruna. By contrast, the domestic economy is damping inflation. The CNB’s forecast expects headline inflation to be below the CNB’s 2% target this year despite the substantial impact of tax changes. Monetary-policy relevant inflation will be below the lower boundary of the tolerance band this year and then return slowly towards the target at the monetary policy horizon.
Petr Vojtíšek, Deputy Executive Director, Monetary and Statistics Department