Inflation comes in slightly below CNB forecast in April
The CNB comments on the April 2017 inflation figures
According to figures released today, the price level increased by 2% year on year in April 2017. Inflation thus returned to the CNB’s 2% target after having fluctuated in the upper half of the tolerance band for three months. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 2.1% year on year in April.
Annual headline inflation was 0.2 percentage point lower in April than forecasted by the CNB. This was because of lower food prices, due primarily to a substantial drop in prices of non-alcoholic and alcoholic beverages. By contrast, the downward deviation of headline inflation from the forecast was reduced by slightly higher-than-expected core inflation. The latter has been reflecting continued domestic economic growth and increased wage growth for some time now. Core inflation has also recently been affected by faster growth in euro area producer prices. The other inflation components, i.e. administered prices, fuel prices and the first-round effects of changes to indirect taxes, were broadly in line with the forecast in April.
The published figures represent only a slight anti-inflationary risk to the CNB’s new forecast. According to the forecast, inflation will fluctuate in the upper half of the tolerance band for the rest of this year. Inflation will then return to the target at the start of next year and remain very close to it at the monetary policy horizon, i.e. in 2018 Q2 and 2018 Q3. The expected inflation moderation is due to a slight slowdown in growth of domestic costs in the period ahead due to rising labour productivity growth, despite slightly accelerating growth in wages and economic activity. At the same time, the current inflationary effect of import prices will quickly turn anti-inflationary again due to slower growth in foreign producer prices coupled with the forecasted appreciation of the koruna.
Tomáš Holub, Executive Director, Monetary Department
Inflation comes in slightly below CNB forecast in April
The CNB comments on the April 2017 inflation figures
According to figures released today, the price level increased by 2% year on year in April 2017. Inflation thus returned to the CNB’s 2% target after having fluctuated in the upper half of the tolerance band for three months. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 2.1% year on year in April.
Annual headline inflation was 0.2 percentage point lower in April than forecasted by the CNB. This was because of lower food prices, due primarily to a substantial drop in prices of non-alcoholic and alcoholic beverages. By contrast, the downward deviation of headline inflation from the forecast was reduced by slightly higher-than-expected core inflation. The latter has been reflecting continued domestic economic growth and increased wage growth for some time now. Core inflation has also recently been affected by faster growth in euro area producer prices. The other inflation components, i.e. administered prices, fuel prices and the first-round effects of changes to indirect taxes, were broadly in line with the forecast in April.
The published figures represent only a slight anti-inflationary risk to the CNB’s new forecast. According to the forecast, inflation will fluctuate in the upper half of the tolerance band for the rest of this year. Inflation will then return to the target at the start of next year and remain very close to it at the monetary policy horizon, i.e. in 2018 Q2 and 2018 Q3. The expected inflation moderation is due to a slight slowdown in growth of domestic costs in the period ahead due to rising labour productivity growth, despite slightly accelerating growth in wages and economic activity. At the same time, the current inflationary effect of import prices will quickly turn anti-inflationary again due to slower growth in foreign producer prices coupled with the forecasted appreciation of the koruna.
Tomáš Holub, Executive Director, Monetary Department