The CNB comments on the October 2016 inflation figures
Inflation comes in slightly above CNB forecast in October
According to figures released today, the price level increased by 0.8% year on year in October 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 0.6% year on year in October. Inflation is thus still well below the CNB target.
Annual headline inflation was slightly above the CNB’s forecast in October. This was due almost exclusively to somewhat higher-than-expected adjusted inflation excluding fuels. This measure of core inflation reflects the positive effect of growth in the domestic economy and wages.
The published figures 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 will continue to rise and will slightly exceed the CNB’s inflation target of 2% 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 October 2016 inflation figures
Inflation comes in slightly above CNB forecast in October
According to figures released today, the price level increased by 0.8% year on year in October 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 0.6% year on year in October. Inflation is thus still well below the CNB target.
Annual headline inflation was slightly above the CNB’s forecast in October. This was due almost exclusively to somewhat higher-than-expected adjusted inflation excluding fuels. This measure of core inflation reflects the positive effect of growth in the domestic economy and wages.
The published figures 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 will continue to rise and will slightly exceed the CNB’s inflation target of 2% 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