Inflation comes in slightly below CNB forecast in October
The CNB comments on the October 2018 inflation figures
According to figures released today, annual inflation slowed to 2.2% in October. It thus 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 2.1% year on year in October.
Inflation was 0.2 percentage point below the CNB’s forecast in October. This deviation was due mainly to lower-than-expected annual food price inflation and, to a lesser extent, to slower growth in administered prices. Conversely, core inflation and annual fuel price inflation were slightly higher than forecasted in October. The first-round effects of changes to indirect taxes were fully in line with the forecast.
The published figures bear out the message of the CNB’s current forecast. According to the forecast, the overall fundamental inflation pressures in the domestic economy remain strong, owing mainly to buoyant wage growth and continued growth of the real economy. At the same time, the inflationary effect of import prices was restored, reflecting rapid growth in foreign prices as well as the recent depreciation of the koruna. Inflation will increase in late 2018 and early 2019 due to a rise in core inflation, a renewed recovery in food price inflation and faster growth in administered prices. In the subsequent period, however, the overall inflation pressures will ease owing to growth in interest rates, renewed appreciation of the koruna and a gradual slowdown in wage growth. Inflation will therefore approach the CNB’s 2% target from above over the monetary policy horizon and stay at the target during 2020.
Tomáš Holub, Executive Director, Monetary Department
Inflation comes in slightly below CNB forecast in October
The CNB comments on the October 2018 inflation figures
According to figures released today, annual inflation slowed to 2.2% in October. It thus 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 2.1% year on year in October.
Inflation was 0.2 percentage point below the CNB’s forecast in October. This deviation was due mainly to lower-than-expected annual food price inflation and, to a lesser extent, to slower growth in administered prices. Conversely, core inflation and annual fuel price inflation were slightly higher than forecasted in October. The first-round effects of changes to indirect taxes were fully in line with the forecast.
The published figures bear out the message of the CNB’s current forecast. According to the forecast, the overall fundamental inflation pressures in the domestic economy remain strong, owing mainly to buoyant wage growth and continued growth of the real economy. At the same time, the inflationary effect of import prices was restored, reflecting rapid growth in foreign prices as well as the recent depreciation of the koruna. Inflation will increase in late 2018 and early 2019 due to a rise in core inflation, a renewed recovery in food price inflation and faster growth in administered prices. In the subsequent period, however, the overall inflation pressures will ease owing to growth in interest rates, renewed appreciation of the koruna and a gradual slowdown in wage growth. Inflation will therefore approach the CNB’s 2% target from above over the monetary policy horizon and stay at the target during 2020.
Tomáš Holub, Executive Director, Monetary Department