Inflation returns to the CNB’s 2% target in June 2024

The CNB comments on the June 2024 inflation figures

According to figures released today, the price level increased by 2% year on year in June 2024. Annual consumer price inflation slowed by 0.6 percentage point compared to the previous month. Inflation thus returned to the CNB’s 2% target after two months.

Annual inflation was 0.4 percentage point lower in June than the CNB’s spring forecast. This was due to a more pronounced slowdown in growth in fuel prices and lower core inflation and, to a lesser extent, weaker first-round effects of changes to indirect taxes. A somewhat more moderate decline in food prices and slightly higher growth in administered prices had the opposite effect on the deviation of actual inflation from the forecast.

June 2024 year-on-year in %
MPR Spring 2024 actual value
CPI 2.4 2.0
Administered prices 5.2 5.7
First-round impacts of changes to indirect taxes 0.2 0.1
Adjusted for changes to indirect taxes    
Prices of food, beverages, tobacco -1.2 -0.8
Core inflation 2.6 2.2
Fuel prices 14.1 5.0
Monetary policy-relevant inflation 2.2 1.9

Core inflation has been fading for the second consecutive year, reflecting not only low growth in the prices of foreign inputs, but also the previous protracted downturn in domestic demand due in part to tight CNB monetary policy. This is fostering a decrease in the profit mark-ups of producers, retailers and service providers over their costs, contributing to a slowdown in the growth in prices of goods and particularly services in June. The growth in imputed rent also slowed, due in part to an only gradual recovery on the property market.

Annual food prices continued to show a modest decline due to declining global agricultural commodity prices and domestic agricultural producer prices. Fuel prices are already rising only at a moderate pace, but they have decreased month on month due in part to the appreciation of the koruna in June. Annual administered price inflation continued to slow in June owing to a decrease in housing-related energy prices.

In month-on-month terms, the price level decreased by 0.3% in June. This was due to food and fuel prices. Annual inflation in June was lower than the CNB’s spring forecast, but in 2024 Q2 as a whole was almost in line with the forecast. According to the forecast, inflation will also be close to the 2% target in the second half of this year.

Petr Král, Executive Director, Monetary Department