Inflation rises to 1.9% in March due to the impacts of the conflict in the Middle East
The CNB comments on the March 2026 inflation figures
In March, annual inflation increased by 0.5 pp to 1.9%, which is above the winter forecast. Inflation started to reflect the effects of the conflict in the Middle East, which immediately affected energy commodity prices and subsequently fuel prices at the pump. As a result, the price level increased markedly by 0.6% month on month.
At the start of this year, inflation was reduced by one-off factors, namely the January transfer of the supported energy sources fee in electricity prices to the state budget, which was complemented in February and March by a dampening effect from food prices. The supply shock to fuel prices thus hit the economy in March in a relatively favourable situation of brisk growth in economic activity and inflation below the target. However, the month-on-month increase in fuel prices largely used up this buffer and returned inflation close to 2%.
Core inflation rose slightly to 2.9% in March due to faster growth in prices of goods and services. The observed increase in services prices reflects solid demand boosted by rising wages. The improving income situation of households and strong demand for housing loans are supporting property price growth, which – together with higher construction work prices – is reflected in an increase in the cost of owner-occupied housing (5.4%).
Inflation may increase slightly further in the months ahead due to further pass-through of the impacts of events in the Middle East, which is not limited to high oil prices but is also affecting other commodities and materials. By contrast, the dampening effect of food prices is likely to persist in the next few months. In the second half of the year, however, food prices will probably be affected by the effects of higher agricultural fertiliser prices. Nevertheless, headline inflation is expected to stay within the tolerance band around the 2% target this year.
Zdeněk Pikhart, Director of the Monetary Policy and Fiscal Analyses Division, Monetary Department
Inflation rises to 1.9% in March due to the impacts of the conflict in the Middle East
The CNB comments on the March 2026 inflation figures
In March, annual inflation increased by 0.5 pp to 1.9%, which is above the winter forecast. Inflation started to reflect the effects of the conflict in the Middle East, which immediately affected energy commodity prices and subsequently fuel prices at the pump. As a result, the price level increased markedly by 0.6% month on month.
At the start of this year, inflation was reduced by one-off factors, namely the January transfer of the supported energy sources fee in electricity prices to the state budget, which was complemented in February and March by a dampening effect from food prices. The supply shock to fuel prices thus hit the economy in March in a relatively favourable situation of brisk growth in economic activity and inflation below the target. However, the month-on-month increase in fuel prices largely used up this buffer and returned inflation close to 2%.
Core inflation rose slightly to 2.9% in March due to faster growth in prices of goods and services. The observed increase in services prices reflects solid demand boosted by rising wages. The improving income situation of households and strong demand for housing loans are supporting property price growth, which – together with higher construction work prices – is reflected in an increase in the cost of owner-occupied housing (5.4%).
Inflation may increase slightly further in the months ahead due to further pass-through of the impacts of events in the Middle East, which is not limited to high oil prices but is also affecting other commodities and materials. By contrast, the dampening effect of food prices is likely to persist in the next few months. In the second half of the year, however, food prices will probably be affected by the effects of higher agricultural fertiliser prices. Nevertheless, headline inflation is expected to stay within the tolerance band around the 2% target this year.
Zdeněk Pikhart, Director of the Monetary Policy and Fiscal Analyses Division, Monetary Department