The CNB comments on the February 2016 inflation figures
Inflation comes in below the CNB forecast in February
According to figures released today, the price level increased by 0.5% year on year in February 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 0.4% year on year in February. 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 0.3 percentage point lower in February than forecasted by the CNB. Food price inflation (including beverages and tobacco but excluding the effects of changes to indirect taxes) was markedly lower than forecasted, recording a year-on-year decline again in February, whereas the forecast had predicted year-on-year growth in food prices. Adjusted inflation excluding fuels was lower as well. However, this indicator of core inflation remains above 1%, reflecting the effect of the growing domestic economy and rising wage growth. The downward effect of fuel prices on inflation was also even stronger than forecasted. By contrast, administered prices grew faster than forecasted as a result of a smaller-than-expected drop in natural gas prices and higher growth in electricity prices. The impacts of indirect tax changes were in line with the forecast.
The released figures represent a slight anti-inflationary risk to the CNB’s current forecast. According to the forecast, annual headline inflation will gradually increase, hitting the 2% target at the monetary policy horizon (i.e. in the first half of next year) and then moving slightly above it. The increase in inflation will be fostered by domestic cost pressures related in particular to accelerating wage growth amid continued growth in economic activity. At the same time, the anti-inflationary effect of import prices, which are currently falling sharply due to a fall in producer prices in the euro area and global oil prices, will fade gradually.
Tomáš Holub, Executive Director, Monetary Department
The CNB comments on the February 2016 inflation figures
Inflation comes in below the CNB forecast in February
According to figures released today, the price level increased by 0.5% year on year in February 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 0.4% year on year in February. 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 0.3 percentage point lower in February than forecasted by the CNB. Food price inflation (including beverages and tobacco but excluding the effects of changes to indirect taxes) was markedly lower than forecasted, recording a year-on-year decline again in February, whereas the forecast had predicted year-on-year growth in food prices. Adjusted inflation excluding fuels was lower as well. However, this indicator of core inflation remains above 1%, reflecting the effect of the growing domestic economy and rising wage growth. The downward effect of fuel prices on inflation was also even stronger than forecasted. By contrast, administered prices grew faster than forecasted as a result of a smaller-than-expected drop in natural gas prices and higher growth in electricity prices. The impacts of indirect tax changes were in line with the forecast.
The released figures represent a slight anti-inflationary risk to the CNB’s current forecast. According to the forecast, annual headline inflation will gradually increase, hitting the 2% target at the monetary policy horizon (i.e. in the first half of next year) and then moving slightly above it. The increase in inflation will be fostered by domestic cost pressures related in particular to accelerating wage growth amid continued growth in economic activity. At the same time, the anti-inflationary effect of import prices, which are currently falling sharply due to a fall in producer prices in the euro area and global oil prices, will fade gradually.
Tomáš Holub, Executive Director, Monetary Department