The CNB comments on the June 2019 inflation figures
According to figures released today, the price level increased by 2.7% year on year in June 2019. Inflation thus declined slightly compared with May and remains in the upper half of the tolerance band around the CNB’s 2% target. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 2.8% year on year in June 2019.
Inflation was 0.3 percentage point above the CNB’s forecast in June. As in May, the deviation from the forecast was due mainly to higher-than-expected food price inflation. A slower-than-forecasted annual decline in fuel prices and slightly faster growth in administered prices acted in the same direction, albeit to a lesser extent. Core inflation was in line with the forecast. The first-round effects of changes to indirect taxes in June were also in line with the CNB’s expectations.
The published data bear out the message of the CNB’s current forecast. The increased inflation this year reflects persisting fundamental price pressures, high administered price inflation and renewed growth in food prices. Inflation will thus be in the upper half of the tolerance band around the CNB’s target over the rest of this year. Nevertheless, the inflation pressures are beginning to ease. Besides a gradual fade-out of the inflationary effect of import prices, the domestic inflation pressures are also diminishing owing to slower growth in economic activity. Inflation will thus decrease to the 2% target next year. This will also be fostered by the monetary policy settings and the fading out of the currently high growth in administered prices.
Petr Král, Executive Director, Monetary Department