The CNB comments on the November 2016 inflation figures
Inflation comes in above CNB forecast in November
According to figures released today, the price level increased by 1.5% year on year in November 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 1.3% year on year in November. Inflation thus returned to the lower half of the tolerance band around the CNB’s 2% target after almost three years. However, it remains below the target.
Annual headline inflation was 0.5 percentage point higher in November than forecasted by the CNB. This was due mainly to faster-than-expected growth in food prices. To a lesser extent, higher-than-expected adjusted inflation excluding fuels also contributed to the deviation from the forecast. This indicator of core inflation reflects the positive effect of continued growth in the domestic economy and accelerating wage growth. By contrast, deviations from the inflation forecast in the opposite direction were recorded by fuel prices and to a very small degree also administered prices.
The published figures represent an inflationary risk to the CNB’s current forecast, which assumes that the exchange rate will be used as a monetary policy instrument until mid-2017. According to this forecast, inflation will rise further and will slightly exceed the CNB’s 2% target at the monetary policy horizon, i.e. in late 2017 and early 2018. It will then return to the target from above during 2018. Domestic costs will continue to rise apace over the entire forecast horizon due to rising wages and price of capital amid continued growth in economic activity. At the same time, the now fading anti-inflationary effect of import prices, stemming from a fall in industrial producer prices in the euro area, will disappear.
Tomáš Holub, Executive Director, Monetary Department
The CNB comments on the November 2016 inflation figures
Inflation comes in above CNB forecast in November
According to figures released today, the price level increased by 1.5% year on year in November 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 1.3% year on year in November. Inflation thus returned to the lower half of the tolerance band around the CNB’s 2% target after almost three years. However, it remains below the target.
Annual headline inflation was 0.5 percentage point higher in November than forecasted by the CNB. This was due mainly to faster-than-expected growth in food prices. To a lesser extent, higher-than-expected adjusted inflation excluding fuels also contributed to the deviation from the forecast. This indicator of core inflation reflects the positive effect of continued growth in the domestic economy and accelerating wage growth. By contrast, deviations from the inflation forecast in the opposite direction were recorded by fuel prices and to a very small degree also administered prices.
The published figures represent an inflationary risk to the CNB’s current forecast, which assumes that the exchange rate will be used as a monetary policy instrument until mid-2017. According to this forecast, inflation will rise further and will slightly exceed the CNB’s 2% target at the monetary policy horizon, i.e. in late 2017 and early 2018. It will then return to the target from above during 2018. Domestic costs will continue to rise apace over the entire forecast horizon due to rising wages and price of capital amid continued growth in economic activity. At the same time, the now fading anti-inflationary effect of import prices, stemming from a fall in industrial producer prices in the euro area, will disappear.
Tomáš Holub, Executive Director, Monetary Department