The CNB comments on the May 2013 inflation figures
Inflation comes in below the CNB forecast in May
According to figures released today, the price level increased by 1.3% year on year in May 2013. Annual headline inflation thus declined substantially compared to April. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, also slowed significantly in May, to 0.6%. 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 May than the CNB’s current forecast. The downward deviation from the forecast was due above all to an unexpectedly large annual decline in prices in the adjusted inflation excluding fuels segment, primarily reflecting falling prices of telecommunication services. A larger-than-forecasted annual decline in fuel prices acted in the same direction on the deviation from the forecast in May. The pass-through of the increase in the excise duty on cigarettes in January to cigarette prices is going on to a lesser extent than expected by the CNB. This also contributed to the deviation of the actual figure from the forecast. Administered prices increased slightly more slowly than forecasted year on year in May. By contrast, food prices grew much faster year on year in May compared to the forecast.
The published figures represent an anti-inflationary risk to the CNB’s current forecast. According to this forecast, current inflation reflect a moderation of the effect of tax changes (a lower impact of this year’s increase in both VAT rates compared to last year’s increase in the reduced rate), slowing growth in administered prices and continuing growth in food prices. Import prices are slightly inflationary owing to depreciation of the koruna. By contrast, the domestic economy is dampening inflation. According to the forecast, headline inflation will be slightly below the CNB’s 2% target this year despite substantial impacts of tax changes. Monetary-policy relevant inflation will be close to the lower boundary of the tolerance band this year and then return slowly to the target at the monetary policy horizon.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the May 2013 inflation figures
Inflation comes in below the CNB forecast in May
According to figures released today, the price level increased by 1.3% year on year in May 2013. Annual headline inflation thus declined substantially compared to April. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, also slowed significantly in May, to 0.6%. 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 May than the CNB’s current forecast. The downward deviation from the forecast was due above all to an unexpectedly large annual decline in prices in the adjusted inflation excluding fuels segment, primarily reflecting falling prices of telecommunication services. A larger-than-forecasted annual decline in fuel prices acted in the same direction on the deviation from the forecast in May. The pass-through of the increase in the excise duty on cigarettes in January to cigarette prices is going on to a lesser extent than expected by the CNB. This also contributed to the deviation of the actual figure from the forecast. Administered prices increased slightly more slowly than forecasted year on year in May. By contrast, food prices grew much faster year on year in May compared to the forecast.
The published figures represent an anti-inflationary risk to the CNB’s current forecast. According to this forecast, current inflation reflect a moderation of the effect of tax changes (a lower impact of this year’s increase in both VAT rates compared to last year’s increase in the reduced rate), slowing growth in administered prices and continuing growth in food prices. Import prices are slightly inflationary owing to depreciation of the koruna. By contrast, the domestic economy is dampening inflation. According to the forecast, headline inflation will be slightly below the CNB’s 2% target this year despite substantial impacts of tax changes. Monetary-policy relevant inflation will be close to the lower boundary of the tolerance band this year and then return slowly to the target at the monetary policy horizon.
Tomáš Holub, Executive Director, Monetary and Statistics Department