The CNB comments on the August 2015 inflation figures
Inflation comes in below the CNB forecast in August
According to figures released today, the price level increased by 0.3% year on year in August 2015. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by just 0.1% year on year in August. Inflation is thus still well below the CNB’s target, or below the lower boundary of the tolerance band around the target.
Annual headline inflation was 0.4 percentage point lower in August than forecasted by the CNB. This deviation was due mostly to food prices, which the forecast had not expected to return to a year-on-year decline. A slightly deeper year-on-year decrease in fuel prices, which are currently starting to reflect the renewed fall in oil prices, also contributed to the downward deviation from the forecast, albeit to a much smaller extent. The other components of inflation were in line with the forecast. Adjusted inflation excluding fuels stayed at 1.1% year on year in line with the forecast. Several contrary factors offsetting each other have been affecting this core inflation indicator recently. The upside factors include growth in the domestic economy and wages and depreciation of the koruna against the dollar, while the fading of the direct effect of the weakened koruna-euro exchange rate and the continuing decline in foreign producer prices are the downside factors.
The released data continue to confirm low inflation in the Czech economy this year. According to the current CNB forecast, headline and monetary policy-relevant inflation will rise until the start of next year. However, they will then dip temporarily and will thus still be below the 2% target at the monetary policy horizon. They will not be near the target until 2017. The overall upward cost pressures on consumer prices will increase only gradually, as the anti-inflationary effect of import prices, reflecting the fall in global prices of oil, subdued inflation in the euro area and the recent appreciation of the koruna against the euro, will not subside until mid-2016. In this respect, the exchange rate appreciation is an unfavourable factor postponing achievement of the inflation target. Costs in the domestic economy will continue to increase due mainly to accelerating wage growth amid continued growth in economic activity.
Tomáš Holub, Executive Director, Monetary Department
The CNB comments on the August 2015 inflation figures
Inflation comes in below the CNB forecast in August
According to figures released today, the price level increased by 0.3% year on year in August 2015. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by just 0.1% year on year in August. Inflation is thus still well below the CNB’s target, or below the lower boundary of the tolerance band around the target.
Annual headline inflation was 0.4 percentage point lower in August than forecasted by the CNB. This deviation was due mostly to food prices, which the forecast had not expected to return to a year-on-year decline. A slightly deeper year-on-year decrease in fuel prices, which are currently starting to reflect the renewed fall in oil prices, also contributed to the downward deviation from the forecast, albeit to a much smaller extent. The other components of inflation were in line with the forecast. Adjusted inflation excluding fuels stayed at 1.1% year on year in line with the forecast. Several contrary factors offsetting each other have been affecting this core inflation indicator recently. The upside factors include growth in the domestic economy and wages and depreciation of the koruna against the dollar, while the fading of the direct effect of the weakened koruna-euro exchange rate and the continuing decline in foreign producer prices are the downside factors.
The released data continue to confirm low inflation in the Czech economy this year. According to the current CNB forecast, headline and monetary policy-relevant inflation will rise until the start of next year. However, they will then dip temporarily and will thus still be below the 2% target at the monetary policy horizon. They will not be near the target until 2017. The overall upward cost pressures on consumer prices will increase only gradually, as the anti-inflationary effect of import prices, reflecting the fall in global prices of oil, subdued inflation in the euro area and the recent appreciation of the koruna against the euro, will not subside until mid-2016. In this respect, the exchange rate appreciation is an unfavourable factor postponing achievement of the inflation target. Costs in the domestic economy will continue to increase due mainly to accelerating wage growth amid continued growth in economic activity.
Tomáš Holub, Executive Director, Monetary Department