The CNB comments on the August 2005 inflation figures
Price developments are very mixed
According to figures released today, annual inflation remained at 1.7% in August, thus staying
just below the lower boundary of the CNB's inflation target. Underlying this low overall figure,
however, are very mixed changes in many prices. On the one hand, food prices are falling thanks to
last year's exceptionally good harvest, and consumer goods are becoming cheaper as a direct result
of foreign competition and the exchange rate of the koruna. On the other hand, some regulated
prices increased, particularly prices of energy, telecommunications services, utility services and
health care. Prices also rose in transport owing to the high price of oil.
Compared to July, the price level was flat month on month, as expected. Underlying this
seemingly calm situation were contrary seasonal price developments - a rise in prices of package
holidays on the one hand, and a decline in prices of food, clothing and footwear on the other. Fuel
prices, however, recorded a temporary pause for breath following earlier sharp growth.
By comparison with the CNB's current forecast, annual inflation remains roughly 0.25 percentage
point lower, as the deviation recorded in July persists. The downward deviation from the forecast
is caused by a lag in the impact of excise duty changes on prices of tobacco products and lower
adjusted inflation excluding fuels. By contrast, fuel prices (and to a lesser extent also food
prices) are higher than forecasted. Summing up, inflation is currently being influenced by several
counteracting cost and administrative factors, while there are still no signs of demand-pull
inflation.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the August 2005 inflation figures
Price developments are very mixed
According to figures released today, annual inflation remained at 1.7% in August, thus staying just below the lower boundary of the CNB's inflation target. Underlying this low overall figure, however, are very mixed changes in many prices. On the one hand, food prices are falling thanks to last year's exceptionally good harvest, and consumer goods are becoming cheaper as a direct result of foreign competition and the exchange rate of the koruna. On the other hand, some regulated prices increased, particularly prices of energy, telecommunications services, utility services and health care. Prices also rose in transport owing to the high price of oil.
Compared to July, the price level was flat month on month, as expected. Underlying this seemingly calm situation were contrary seasonal price developments - a rise in prices of package holidays on the one hand, and a decline in prices of food, clothing and footwear on the other. Fuel prices, however, recorded a temporary pause for breath following earlier sharp growth.
By comparison with the CNB's current forecast, annual inflation remains roughly 0.25 percentage point lower, as the deviation recorded in July persists. The downward deviation from the forecast is caused by a lag in the impact of excise duty changes on prices of tobacco products and lower adjusted inflation excluding fuels. By contrast, fuel prices (and to a lesser extent also food prices) are higher than forecasted. Summing up, inflation is currently being influenced by several counteracting cost and administrative factors, while there are still no signs of demand-pull inflation.
Tomáš Holub, Executive Director, Monetary and Statistics Department