The CNB comments on the June 2004 inflation figures
12.7.2004
Inflation rises more slowly than forecasted
The inflation figures for June show an unwinding of the effects of the changes made to indirect
taxes in January and May this year. The tax changes affected the structure of the price movements
more strongly than overall inflation. They are visible primarily in a rise in prices of tobacco
products and restaurant and other services, which since May have been subject to the basic VAT
rate. Overall, however, the CNB's forecast that the Czech Republic's entry into the EU and the
related tax changes will not lead to a step increase in the price level has been confirmed over the
last two months.
The June annual consumer price inflation outturn of 2.9% was several tenths of a percentage
point lower than the CNB forecasted in April. Inflation is gradually picking up, but is doing so
more slowly than originally forecasted.
Food prices recorded the largest deviation from the forecast. However, prices in this category
showed mixed - and not entirely typical - developments. Prices of some foods (cereals, bakery
products, livestock production) are responding to the rise in agricultural producer prices.
Overall, though, the pressures for slower growth in food prices prevailed. These included the
unusual movement of potato prices in June. The rise in fuel prices was higher than expected,
reflecting the high world prices of oil. Adjusted inflation excluding fuel prices, an indicator the
CNB uses to analyse the demand pressures on inflation, was slightly lower than predicted in
April.
The CNB comments on the June 2004 inflation figures
Inflation rises more slowly than forecasted
The inflation figures for June show an unwinding of the effects of the changes made to indirect taxes in January and May this year. The tax changes affected the structure of the price movements more strongly than overall inflation. They are visible primarily in a rise in prices of tobacco products and restaurant and other services, which since May have been subject to the basic VAT rate. Overall, however, the CNB's forecast that the Czech Republic's entry into the EU and the related tax changes will not lead to a step increase in the price level has been confirmed over the last two months.
The June annual consumer price inflation outturn of 2.9% was several tenths of a percentage point lower than the CNB forecasted in April. Inflation is gradually picking up, but is doing so more slowly than originally forecasted.
Food prices recorded the largest deviation from the forecast. However, prices in this category showed mixed - and not entirely typical - developments. Prices of some foods (cereals, bakery products, livestock production) are responding to the rise in agricultural producer prices. Overall, though, the pressures for slower growth in food prices prevailed. These included the unusual movement of potato prices in June. The rise in fuel prices was higher than expected, reflecting the high world prices of oil. Adjusted inflation excluding fuel prices, an indicator the CNB uses to analyse the demand pressures on inflation, was slightly lower than predicted in April.
Pavel Zúbek, Communications division, CNB