The CNB comments on the June 2016 inflation figures
Inflation comes in slightly above CNB forecast in June
According to figures released today, the price level increased by 0.1% year on year in June 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes fell slightly year on year in June. Inflation is thus still well below the CNB’s target.
Annual headline inflation was 0.1 percentage point higher in June than forecasted by the CNB. The deviation from the forecast was due to a less pronounced drop in fuel prices and administered prices. Fuel prices were affected by higher-than-expected world oil prices. As regards administered prices, the forecast assumption of a further drop in the price of natural gas for households materialised only partially. By contrast, food prices recorded a deeper fall compared to the forecast. The forecast for core inflation, i.e. adjusted inflation excluding fuels, which reflects the effect of the growing domestic economy and rising wages, materialised. The impacts of indirect tax changes were also in line with the forecast.
The published figures represent a only a small deviation from the CNB’s current forecast. According to this forecast, inflation will start to rise at the close of this year, hitting the 2% target at the monetary policy horizon and then slightly exceeding it. The overall upward cost pressures on consumer prices will re-emerge this year. Costs in the domestic economy will continue to increase over the entire forecast horizon due to rising wages and price of capital amid continued growth in economic activity. At the same time, the current strongly anti-inflationary effect of import prices, stemming from a fall in producer prices in the euro area, will fade gradually. The return of inflation to the target will also be aided by the use of the exchange rate as a monetary policy instrument until mid-2017, as assumed by the forecast.
Tomáš Holub, Executive Director, Monetary Department
The CNB comments on the June 2016 inflation figures
Inflation comes in slightly above CNB forecast in June
According to figures released today, the price level increased by 0.1% year on year in June 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes fell slightly year on year in June. Inflation is thus still well below the CNB’s target.
Annual headline inflation was 0.1 percentage point higher in June than forecasted by the CNB. The deviation from the forecast was due to a less pronounced drop in fuel prices and administered prices. Fuel prices were affected by higher-than-expected world oil prices. As regards administered prices, the forecast assumption of a further drop in the price of natural gas for households materialised only partially. By contrast, food prices recorded a deeper fall compared to the forecast. The forecast for core inflation, i.e. adjusted inflation excluding fuels, which reflects the effect of the growing domestic economy and rising wages, materialised. The impacts of indirect tax changes were also in line with the forecast.
The published figures represent a only a small deviation from the CNB’s current forecast. According to this forecast, inflation will start to rise at the close of this year, hitting the 2% target at the monetary policy horizon and then slightly exceeding it. The overall upward cost pressures on consumer prices will re-emerge this year. Costs in the domestic economy will continue to increase over the entire forecast horizon due to rising wages and price of capital amid continued growth in economic activity. At the same time, the current strongly anti-inflationary effect of import prices, stemming from a fall in producer prices in the euro area, will fade gradually. The return of inflation to the target will also be aided by the use of the exchange rate as a monetary policy instrument until mid-2017, as assumed by the forecast.
Tomáš Holub, Executive Director, Monetary Department