The CNB comments on the December 2005 inflation figures
Inflationary pressures weaker than predicted by CNB
According to figures released today, annual inflation slowed to 2.2% in December 2005. This
meant that it ended last year in the lower half of the CNB's target band.
In month-on-month terms, the price level decreased by 0.1 percentage point compared to November.
This mainly reflected a decline in fuel prices, which sharply corrected their September step
increase in the final months of 2005.
Annual inflation was one percentage point below the CNB's October forecast. The cost-push
inflationary pressures turned out to be weaker than expected. Three factors contributed equally to
the deviation of the actual figure from the forecast. First, prices of tobacco products have so far
only moderately reflected the increase in excise duties in July last year. Second, the correction
in fuel prices occurred sooner and to a greater extent than the CNB had expected. And third, food
prices recorded a slight year-on-year decline in December, although they had been expected to rise
moderately. Adjusted inflation excluding fuels was also rather lower than forecasted, but this
deviation was broadly offset by higher growth in regulated prices. Adjusted inflation continues to
suggest that there are no significant demand pressures present in the economy, and the koruna's
exchange rate is also having an anti-inflationary effect.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the December 2005 inflation figures
Inflationary pressures weaker than predicted by CNB
According to figures released today, annual inflation slowed to 2.2% in December 2005. This meant that it ended last year in the lower half of the CNB's target band.
In month-on-month terms, the price level decreased by 0.1 percentage point compared to November. This mainly reflected a decline in fuel prices, which sharply corrected their September step increase in the final months of 2005.
Annual inflation was one percentage point below the CNB's October forecast. The cost-push inflationary pressures turned out to be weaker than expected. Three factors contributed equally to the deviation of the actual figure from the forecast. First, prices of tobacco products have so far only moderately reflected the increase in excise duties in July last year. Second, the correction in fuel prices occurred sooner and to a greater extent than the CNB had expected. And third, food prices recorded a slight year-on-year decline in December, although they had been expected to rise moderately. Adjusted inflation excluding fuels was also rather lower than forecasted, but this deviation was broadly offset by higher growth in regulated prices. Adjusted inflation continues to suggest that there are no significant demand pressures present in the economy, and the koruna's exchange rate is also having an anti-inflationary effect.
Tomáš Holub, Executive Director, Monetary and Statistics Department