The CNB comments on the March 2017 inflation figures
According to figures released today, the price level increased by 2.6% year on year in March 2017.Inflation has thus been slightly above the CNB’s target of 2%, but within the tolerance band, since the start of the year. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 2.7% year on year in March.
Annual headline inflation was 0.3 percentage point higher in March than forecasted by the CNB. As in the previous two months, this was due primarily to higher-than-expected adjusted inflation excluding fuel prices. This indicator of core inflation has been reflecting the positive effect of continued growth in the domestic economy and accelerating wage growth for some time now. Core inflation has recently also been affected by renewed growth in euro area producer prices and by the price impacts of the introduction of electronic sales registration in accommodation and food services. Food prices contributed to the higher-than-forecasted inflation to a much smaller extent in March than at the start of the year, following a correction of the previous jump in traditionally volatile prices of vegetables. A smaller-than-expected increase in fuel prices and a slightly larger decline in administered prices affected the deviation from the forecast in the opposite direction. The impact of indirect tax changes was in line with the forecast.
The published figures represent a slight inflationary risk to the fulfilment of the CNB’s current forecast for the remainder of 2017. According to this forecast, inflation will remain in the upper half of the tolerance band around the target this year. It will return to the 2% target from above in the first half of 2018. Domestic production costs will continue to rise apace, due mainly to rising wages. Coupled with the observed renewed growth in industrial producer prices in the euro area, this will lead to a further increase in core inflation. Counteracting this will be a strengthening of the koruna expected by the forecast from mid-2017 onwards.
Tomáš Holub, Executive Director, Monetary Department
Inflation remains above CNB forecast in March
The CNB comments on the March 2017 inflation figures
According to figures released today, the price level increased by 2.6% year on year in March 2017.Inflation has thus been slightly above the CNB’s target of 2%, but within the tolerance band, since the start of the year. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 2.7% year on year in March.
Annual headline inflation was 0.3 percentage point higher in March than forecasted by the CNB. As in the previous two months, this was due primarily to higher-than-expected adjusted inflation excluding fuel prices. This indicator of core inflation has been reflecting the positive effect of continued growth in the domestic economy and accelerating wage growth for some time now. Core inflation has recently also been affected by renewed growth in euro area producer prices and by the price impacts of the introduction of electronic sales registration in accommodation and food services. Food prices contributed to the higher-than-forecasted inflation to a much smaller extent in March than at the start of the year, following a correction of the previous jump in traditionally volatile prices of vegetables. A smaller-than-expected increase in fuel prices and a slightly larger decline in administered prices affected the deviation from the forecast in the opposite direction. The impact of indirect tax changes was in line with the forecast.
The published figures represent a slight inflationary risk to the fulfilment of the CNB’s current forecast for the remainder of 2017. According to this forecast, inflation will remain in the upper half of the tolerance band around the target this year. It will return to the 2% target from above in the first half of 2018. Domestic production costs will continue to rise apace, due mainly to rising wages. Coupled with the observed renewed growth in industrial producer prices in the euro area, this will lead to a further increase in core inflation. Counteracting this will be a strengthening of the koruna expected by the forecast from mid-2017 onwards.
Tomáš Holub, Executive Director, Monetary Department