The CNB comments on the December 2012 inflation figures
Inflation comes in below the CNB forecast in December 2012
According to figures released today, the price level increased by 2.4% year on year in December 2012. Annual headline inflation thus slowed for the third consecutive month. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, also declined further in December, to 1.1%. This means that it is near the lower boundary of the tolerance band around the CNB’s target.
Annual headline inflation was 0.4 percentage point lower in December than the CNB’s current forecast. The downward deviation from the forecast was due most of all to a sharper price decrease in the segment of adjusted inflation excluding fuels, which was affected mainly by subdued domestic economic activity, and to lower-than-expected fuel price inflation. Annual administered price inflation was also slightly lower than expected by the CNB. Like the first-round effects of indirect tax changes, food prices were in line with the forecast.
The published data confirm the message of the CNB’s current forecast regarding the anti-inflationary effect of the domestic economy, indicating that this effect may be stronger than forecasted. Tax changes, food price growth and gradually slowing import price growth were the main sources of inflation last year. According to the forecast, headline inflation will stay slightly above the CNB’s target this year owing to an increase in both VAT rates of one percentage point. After this tax effect drops out in early 2014, headline inflation will fall slightly below the target. Monetary-policy relevant inflation will stay in the lower half of the tolerance band around the CNB’s target until the end of 2014, i.e. also at the monetary policy horizon.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the December 2012 inflation figures
Inflation comes in below the CNB forecast in December 2012
According to figures released today, the price level increased by 2.4% year on year in December 2012. Annual headline inflation thus slowed for the third consecutive month. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, also declined further in December, to 1.1%. This means that it is near the lower boundary of the tolerance band around the CNB’s target.
Annual headline inflation was 0.4 percentage point lower in December than the CNB’s current forecast. The downward deviation from the forecast was due most of all to a sharper price decrease in the segment of adjusted inflation excluding fuels, which was affected mainly by subdued domestic economic activity, and to lower-than-expected fuel price inflation. Annual administered price inflation was also slightly lower than expected by the CNB. Like the first-round effects of indirect tax changes, food prices were in line with the forecast.
The published data confirm the message of the CNB’s current forecast regarding the anti-inflationary effect of the domestic economy, indicating that this effect may be stronger than forecasted. Tax changes, food price growth and gradually slowing import price growth were the main sources of inflation last year. According to the forecast, headline inflation will stay slightly above the CNB’s target this year owing to an increase in both VAT rates of one percentage point. After this tax effect drops out in early 2014, headline inflation will fall slightly below the target. Monetary-policy relevant inflation will stay in the lower half of the tolerance band around the CNB’s target until the end of 2014, i.e. also at the monetary policy horizon.
Tomáš Holub, Executive Director, Monetary and Statistics Department