The CNB comments on the June 2005 inflation figures
Inflation pick-up is not due to demand pressures
According to figures released today, consumer prices rose by 1.8% year on year in June, an
increase of half a percentage point on the previous month. This unexpected pick-up was due
primarily to a significant increase in telecommunications prices and, to a lesser extent, to food
and fuel price developments.
Prices in the post and telecommunications category rose by more than 15% compared to May this
year. This change alone accounted for roughly two-thirds of the June month-on-month inflation
figure of 0.6%. Part of the price movement in June was also attributable to a slight rise in food
prices, higher fuel prices associated with developments on the oil market, and a seasonal increase
in prices of package holidays.
The June result means that annual inflation diverged further from the CNB's April forecast. The
reality exceeds the most recent forecast by almost three-quarters of a percentage point. However,
this divergence is due to regulated prices, food and fuels, i.e. price categories that tend to be
highly volatile and are affected primarily by factors other than the business cycle. By contrast,
adjusted inflation excluding fuels, which is important from the monetary policy perspective, was
close to the forecast. This confirms that the June pick-up in inflation was not caused by
demand-pull inflationary pressures in the Czech economy.
Tomáš Holub Executive Director, Monetary and Statistics Department, CNB
The CNB comments on the June 2005 inflation figures
Inflation pick-up is not due to demand pressures
According to figures released today, consumer prices rose by 1.8% year on year in June, an increase of half a percentage point on the previous month. This unexpected pick-up was due primarily to a significant increase in telecommunications prices and, to a lesser extent, to food and fuel price developments.
Prices in the post and telecommunications category rose by more than 15% compared to May this year. This change alone accounted for roughly two-thirds of the June month-on-month inflation figure of 0.6%. Part of the price movement in June was also attributable to a slight rise in food prices, higher fuel prices associated with developments on the oil market, and a seasonal increase in prices of package holidays.
The June result means that annual inflation diverged further from the CNB's April forecast. The reality exceeds the most recent forecast by almost three-quarters of a percentage point. However, this divergence is due to regulated prices, food and fuels, i.e. price categories that tend to be highly volatile and are affected primarily by factors other than the business cycle. By contrast, adjusted inflation excluding fuels, which is important from the monetary policy perspective, was close to the forecast. This confirms that the June pick-up in inflation was not caused by demand-pull inflationary pressures in the Czech economy.
Tomáš Holub
Executive Director, Monetary and Statistics Department, CNB