Inflation comes in above the CNB’s target in January
The CNB comments on the January 2017 inflation figures
According to figures released today, the price level increased by 2.2% year on year in January 2017. Inflation is thus slightly above the CNB’s target of 2% at the start of this year. Consumer prices adjusted for the first-round effects of changes to indirect taxes also rose by 2.2% year on year in January 2017.
Annual headline inflation was 0.3 percentage point higher in January than forecasted by the CNB. This was due mainly to faster-than-expected growth in adjusted inflation excluding fuels. This indicator of core inflation has for some time now been reflecting the positive effect of continued growth of the domestic economy, rising wage growth, renewed growth in producer prices in the euro area and in recent months also the price impacts of the introduction of electronic sales registration in the accommodation and food services sector. To a lesser extent, the higher-than-forecasted January inflation was also fostered by food prices and administered prices. The growth in fuel prices in January was in line with the CNB’s expectations. The impacts of indirect tax changes were also in line with the forecast.
The published figures represent a slight inflationary risk to the CNB’s forecast, which assumes that the exchange rate will be used as a monetary policy instrument until mid-2017. According to this forecast, inflation will increase further into the upper half of the tolerance band around the target. It will return to the 2% target from above at the monetary policy horizon, i.e. in the first half of 2018. Domestic costs will continue to rise apace due mainly to rising wages. Coupled with renewed growth in industrial producer prices in the euro area, this will lead to a further increase in core inflation. Counteracting this will be a strengthening of the koruna expected by the forecast from mid-2017 onwards.
Luboš Komárek, Director of External Economic Relations Division, Monetary Department
Inflation comes in above the CNB’s target in January
The CNB comments on the January 2017 inflation figures
According to figures released today, the price level increased by 2.2% year on year in January 2017. Inflation is thus slightly above the CNB’s target of 2% at the start of this year. Consumer prices adjusted for the first-round effects of changes to indirect taxes also rose by 2.2% year on year in January 2017.
Annual headline inflation was 0.3 percentage point higher in January than forecasted by the CNB. This was due mainly to faster-than-expected growth in adjusted inflation excluding fuels. This indicator of core inflation has for some time now been reflecting the positive effect of continued growth of the domestic economy, rising wage growth, renewed growth in producer prices in the euro area and in recent months also the price impacts of the introduction of electronic sales registration in the accommodation and food services sector. To a lesser extent, the higher-than-forecasted January inflation was also fostered by food prices and administered prices. The growth in fuel prices in January was in line with the CNB’s expectations. The impacts of indirect tax changes were also in line with the forecast.
The published figures represent a slight inflationary risk to the CNB’s forecast, which assumes that the exchange rate will be used as a monetary policy instrument until mid-2017. According to this forecast, inflation will increase further into the upper half of the tolerance band around the target. It will return to the 2% target from above at the monetary policy horizon, i.e. in the first half of 2018. Domestic costs will continue to rise apace due mainly to rising wages. Coupled with renewed growth in industrial producer prices in the euro area, this will lead to a further increase in core inflation. Counteracting this will be a strengthening of the koruna expected by the forecast from mid-2017 onwards.
Luboš Komárek, Director of External Economic Relations Division, Monetary Department