The CNB comments on the October 2011 inflation figures
Inflation comes in slightly above CNB forecast in October 2011
According to figures released today, the price level increased by 2.3% year on year in October 2011. Headline inflation thus rose noticeably compared to September. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, also increased in October to 2.3% and is thus slightly above the inflation target.
Annual headline inflation was 0.2 percentage point higher in October this year than the CNB's current forecast. The upward deviation from the forecast was due to food prices and adjusted inflation excluding fuel prices. It is possible that food prices are starting to reflect in advance the effect of the increase in the reduced VAT rate planned for January 2012, similarly to how tax changes have passed through in advance to prices in several cases in the past. By contrast, annual growth in administered prices and fuel prices was rather lower in October 2011 than expected by the CNB.
Despite the above deviations, the October inflation data are roughly in line with the message of the CNB forecast overall. The forecast’s assessment of the situation in the previous quarter is that the inflationary pressures from the domestic economy were not significant and that the main source of inflation remained commodity and food prices, now also joined by the exchange rate. According to the CNB forecast, headline inflation will rise temporarily to just below 3% in 2012 owing to the VAT increase, but will fall below the target at the start of 2013. Monetary-policy relevant inflation will be slightly below the target in 2012 and 2013.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the October 2011 inflation figures
Inflation comes in slightly above CNB forecast in October 2011
According to figures released today, the price level increased by 2.3% year on year in October 2011. Headline inflation thus rose noticeably compared to September. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, also increased in October to 2.3% and is thus slightly above the inflation target.
Annual headline inflation was 0.2 percentage point higher in October this year than the CNB's current forecast. The upward deviation from the forecast was due to food prices and adjusted inflation excluding fuel prices. It is possible that food prices are starting to reflect in advance the effect of the increase in the reduced VAT rate planned for January 2012, similarly to how tax changes have passed through in advance to prices in several cases in the past. By contrast, annual growth in administered prices and fuel prices was rather lower in October 2011 than expected by the CNB.
Despite the above deviations, the October inflation data are roughly in line with the message of the CNB forecast overall. The forecast’s assessment of the situation in the previous quarter is that the inflationary pressures from the domestic economy were not significant and that the main source of inflation remained commodity and food prices, now also joined by the exchange rate. According to the CNB forecast, headline inflation will rise temporarily to just below 3% in 2012 owing to the VAT increase, but will fall below the target at the start of 2013. Monetary-policy relevant inflation will be slightly below the target in 2012 and 2013.
Tomáš Holub, Executive Director, Monetary and Statistics Department