The CNB comments on the July 2019 inflation figures
According to figures released today, the price level increased by 2.9% year on year in July 2019. Inflation thus rose slightly compared with June 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 3.0% year on year in July 2019.
Inflation was 0.2 percentage point above the CNB’s forecast in July. The deviation from the forecast was due almost exclusively to higher-than-expected core inflation. A slower-than-forecasted year-on-year decline in fuel prices acted in the same direction, albeit to a much lesser extent. Administered prices and food prices were in line with the forecast. The first-round effects of changes to indirect taxes in July were also in line with the CNB’s expectations.
The published figures represent a slight inflationary risk to the CNB’s current forecast in the months ahead. According to the forecast, inflation will remain elevated in the upper half of the tolerance band around the CNB’s target in the second half of this year, reflecting persisting strong domestic price pressures and high growth in administered prices and food prices. Inflation will decrease at the start of next year, owing to the previous monetary policy tightening and an unwinding of the currently high growth in administered prices; it will be decreasing towards the 2% target during the year.
Luboš Komárek, Deputy Executive Director, Monetary Department