Inflation comes in slightly below the forecast and remains above the upper boundary of the CNB’s tolerance band in March 2020
The CNB comments on the March 2020 inflation figures
According to figures released today, the price level increased by 3.4% year on year in March 2020. Inflation decreased compared with February but remained above the upper boundary 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 3.4% year on year in March.
The March annual consumer price inflation figure was 0.2 percentage point lower than the CNB’s February forecast. The negative deviation of inflation from the forecast was largely due to still lower-than-expected impacts of changes to indirect taxes. These impacts are related to later-than-expected pass-through of the increased excise duty on tobacco to cigarette prices. An unexpected decline in fuel prices, reflecting the recent drop in global oil prices, also contributed significantly to inflation being below the forecast. By contrast, food price inflation in March was still markedly higher than forecasted, and core inflation was also appreciably higher than expected. These prices still reflected the until recently strong domestic inflation pressures, and food prices were also affected by previous growth in global agricultural commodity prices. Administered prices rose slightly faster than forecasted.
The published figures so far only partly reflect the dramatic change in the economic situation due to the coronavirus pandemic and the related measures to counter the contagion. Their impacts significantly change the existing outlooks for the global and Czech economy in the anti-inflationary direction. This will gradually pass through to inflation in the quarters ahead.
Petr Král, Executive Director, Monetary Department
Inflation comes in slightly below the forecast and remains above the upper boundary of the CNB’s tolerance band in March 2020
The CNB comments on the March 2020 inflation figures
According to figures released today, the price level increased by 3.4% year on year in March 2020. Inflation decreased compared with February but remained above the upper boundary 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 3.4% year on year in March.
The March annual consumer price inflation figure was 0.2 percentage point lower than the CNB’s February forecast. The negative deviation of inflation from the forecast was largely due to still lower-than-expected impacts of changes to indirect taxes. These impacts are related to later-than-expected pass-through of the increased excise duty on tobacco to cigarette prices. An unexpected decline in fuel prices, reflecting the recent drop in global oil prices, also contributed significantly to inflation being below the forecast. By contrast, food price inflation in March was still markedly higher than forecasted, and core inflation was also appreciably higher than expected. These prices still reflected the until recently strong domestic inflation pressures, and food prices were also affected by previous growth in global agricultural commodity prices. Administered prices rose slightly faster than forecasted.
The published figures so far only partly reflect the dramatic change in the economic situation due to the coronavirus pandemic and the related measures to counter the contagion. Their impacts significantly change the existing outlooks for the global and Czech economy in the anti-inflationary direction. This will gradually pass through to inflation in the quarters ahead.
Petr Král, Executive Director, Monetary Department