The CNB comments on the April 2016 inflation figures
Inflation comes in above the CNB forecast in April
According to figures released today, the price level increased by 0.6% year on year in April 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 0.4% year on year in April. Inflation is still well below the CNB’s target.
Annual headline inflation was 0.3 percentage point higher in April than forecasted by the CNB. The deviation from the forecast was due to food prices including alcohol and tobacco prices, which were flat year on year in April, whereas the forecast had expected a continued year-on-year decline. Somewhat higher-than-forecasted annual growth in administered prices acted in the same direction. By contrast, adjusted inflation excluding fuels was marginally below the forecast. However, this measure of core inflation remains above 1%, reflecting the effect of the growing domestic economy and rising wages. The annual drop in fuel prices in April was in line with the CNB’s expectations. The impacts of indirect tax changes were also in line with the forecast.
The published figures represent a slight inflationary risk to the CNB’s forecast. According to the forecast, inflation will decline temporarily again close to zero in the near future. However, it will start to rise at the close of this year, hitting the 2% target at the monetary policy horizon and then slightly exceeding it. The overall upward cost pressures on consumer prices will re-emerge this year. Costs in the domestic economy will continue to increase over the entire forecast horizon due to rising wages and price of capital amid continued growth in economic activity. At the same time, the current strongly anti-inflationary effect of import prices, stemming from a fall in producer prices in the euro area, will fade gradually. The return of inflation to the target will also be aided by the extension of the use of the exchange rate as a monetary policy instrument until mid-2017, as assumed by the forecast.
Tomáš Holub, Executive Director, Monetary Department
The CNB comments on the April 2016 inflation figures
Inflation comes in above the CNB forecast in April
According to figures released today, the price level increased by 0.6% year on year in April 2016. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 0.4% year on year in April. Inflation is still well below the CNB’s target.
Annual headline inflation was 0.3 percentage point higher in April than forecasted by the CNB. The deviation from the forecast was due to food prices including alcohol and tobacco prices, which were flat year on year in April, whereas the forecast had expected a continued year-on-year decline. Somewhat higher-than-forecasted annual growth in administered prices acted in the same direction. By contrast, adjusted inflation excluding fuels was marginally below the forecast. However, this measure of core inflation remains above 1%, reflecting the effect of the growing domestic economy and rising wages. The annual drop in fuel prices in April was in line with the CNB’s expectations. The impacts of indirect tax changes were also in line with the forecast.
The published figures represent a slight inflationary risk to the CNB’s forecast. According to the forecast, inflation will decline temporarily again close to zero in the near future. However, it will start to rise at the close of this year, hitting the 2% target at the monetary policy horizon and then slightly exceeding it. The overall upward cost pressures on consumer prices will re-emerge this year. Costs in the domestic economy will continue to increase over the entire forecast horizon due to rising wages and price of capital amid continued growth in economic activity. At the same time, the current strongly anti-inflationary effect of import prices, stemming from a fall in producer prices in the euro area, will fade gradually. The return of inflation to the target will also be aided by the extension of the use of the exchange rate as a monetary policy instrument until mid-2017, as assumed by the forecast.
Tomáš Holub, Executive Director, Monetary Department