The CNB comments on the September 2016 inflation figures
Inflation comes in slightly above CNB forecast in September
According to figures released today, the price level increased by 0.5% year on year in September 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 0.3% year on year in September. Inflation is thus still well below the CNB’s target.
Annual headline inflation was slightly above the CNB’s expectations in September. This was due to a slightly smaller annual decline in administered prices and food prices than forecasted. A rather larger-than-forecasted annual decline in fuel prices acted in the opposite direction on the deviation from the forecast.
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 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.
Petr Král, Deputy Executive Director, Monetary Department
The CNB comments on the September 2016 inflation figures
Inflation comes in slightly above CNB forecast in September
According to figures released today, the price level increased by 0.5% year on year in September 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 0.3% year on year in September. Inflation is thus still well below the CNB’s target.
Annual headline inflation was slightly above the CNB’s expectations in September. This was due to a slightly smaller annual decline in administered prices and food prices than forecasted. A rather larger-than-forecasted annual decline in fuel prices acted in the opposite direction on the deviation from the forecast.
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 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.
Petr Král, Deputy Executive Director, Monetary Department