The CNB comments on the August 2016 inflation figures
Inflation in line with the CNB’s forecast in August
According to figures released today, the price level increased by 0.6% year on year in August 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 0.4% year on year in August. Inflation is thus still well below the CNB’s target.
Annual headline inflation was in line with the CNB’s expectations in August, and the same is also largely true of the individual consumer basket items.
The published figures thus bear out the message of 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 starts to rise and will slightly exceed the 2% target at the monetary policy horizon, i.e. in 2017 H2. Sustainable fulfilment of this target is a condition for a return to conventional monetary policy. Domestic costs will continue to rise apace over the entire forecast horizon due to rising wages and price of capital amid continued growth of the Czech economy. At the same time, the anti-inflationary effect of import prices will gradually disappear. During 2018, inflation will return to the target from above.
Tomáš Holub, Executive Director, Monetary Department
The CNB comments on the August 2016 inflation figures
Inflation in line with the CNB’s forecast in August
According to figures released today, the price level increased by 0.6% year on year in August 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 0.4% year on year in August. Inflation is thus still well below the CNB’s target.
Annual headline inflation was in line with the CNB’s expectations in August, and the same is also largely true of the individual consumer basket items.
The published figures thus bear out the message of 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 starts to rise and will slightly exceed the 2% target at the monetary policy horizon, i.e. in 2017 H2. Sustainable fulfilment of this target is a condition for a return to conventional monetary policy. Domestic costs will continue to rise apace over the entire forecast horizon due to rising wages and price of capital amid continued growth of the Czech economy. At the same time, the anti-inflationary effect of import prices will gradually disappear. During 2018, inflation will return to the target from above.
Tomáš Holub, Executive Director, Monetary Department