The CNB comments on the May 2016 inflation figures
Inflation in line with the CNB forecast in May
According to figures released today, the price level increased by 0.1% year on year in May 2016. Consumer price inflation adjusted for the first-round effects of changes to indirect taxes fell slightly year on year in May. Inflation is thus still well below the CNB’s target.
Annual headline inflation was in line with the CNB’s expectations in May. The actual figures also corresponded to the forecast as regards prices in the individual consumer basket items.
The published figures thus bear out the message of the CNB’s current forecast. According to the forecast, inflation will decline temporarily again close to zero in the second quarter. However, it will start to rise at the close of this year, hitting the 2% target at the monetary policy horizon and then slightly exceeding it. The overall upward cost pressures on consumer prices will re-emerge this year. Costs in the domestic economy will continue to increase over the entire forecast horizon due to rising wages and price of capital amid continued growth in economic activity. At the same time, the current strongly anti-inflationary effect of import prices, stemming from a fall in producer prices in the euro area, will fade gradually. The return of inflation to the target will also be aided by the use of the exchange rate as a monetary policy instrument until mid-2017, as assumed by the forecast.
Tomáš Holub, Executive Director, Monetary Department
The CNB comments on the May 2016 inflation figures
Inflation in line with the CNB forecast in May
According to figures released today, the price level increased by 0.1% year on year in May 2016. Consumer price inflation adjusted for the first-round effects of changes to indirect taxes fell slightly year on year in May. Inflation is thus still well below the CNB’s target.
Annual headline inflation was in line with the CNB’s expectations in May. The actual figures also corresponded to the forecast as regards prices in the individual consumer basket items.
The published figures thus bear out the message of the CNB’s current forecast. According to the forecast, inflation will decline temporarily again close to zero in the second quarter. However, it will start to rise at the close of this year, hitting the 2% target at the monetary policy horizon and then slightly exceeding it. The overall upward cost pressures on consumer prices will re-emerge this year. Costs in the domestic economy will continue to increase over the entire forecast horizon due to rising wages and price of capital amid continued growth in economic activity. At the same time, the current strongly anti-inflationary effect of import prices, stemming from a fall in producer prices in the euro area, will fade gradually. The return of inflation to the target will also be aided by the use of the exchange rate as a monetary policy instrument until mid-2017, as assumed by the forecast.
Tomáš Holub, Executive Director, Monetary Department