The CNB comments on the January 2007 inflation figures
Inflation comes in below the CNB forecast
According to figures released today, annual inflation fell to 1.3% in January 2007, from 1.7% in
December last year. This means that it stayed below the lower boundary of the tolerance band set by
the CNB around its target of 3%.
Starting January 2007, inflation is calculated using a new consumer basket based on 2005
weights, thus better reflecting the current household consumption structure. The weight of
regulated prices and food prices, which are currently displaying above-average growth rates, has
decreased in the new basket. By contrast, the share of fuel prices and adjusted inflation excluding
fuels, which are recording negative or low positive growth rates, has risen. This may have slightly
reduced the inflation recorded in January 2007. However, inflation will also be strongly affected
over the coming two years by the fact that the weight of tobacco products has increased, which
might amplify the expected effects of changes to indirect taxes. According to preliminary CNB
analyses, the revision of the consumer basket should not have a significant impact overall on the
forecasted path of headline inflation over the period important for monetary policy
decision-making.
In month-on-month terms, the price level increased by 1% in January. As usual, some
housing-related regulated prices showed particularly strong growth in January, although the rise in
rents has so far been smaller than would correspond to the deregulation measures adopted. The
increase in excise duty on tobacco products in April 2006 also started to pass through to prices
with a considerable lag. As regards market prices, price growth was recorded especially for food
and beverages, recreation and culture, and hotels and restaurants. On the other hand, fuel prices
decreased. For seasonal reasons, the same was true of clothing and footwear prices.
Annual inflation in January was 0.2 to 0.3 percentage point lower than the current CNB forecast.
However, the forecast was prepared using the original consumer basket, as the new one was not known
at the time. This makes comparisons somewhat difficult. Correct comparisons will only be possible
on the basis of more detailed data and analyses. For the time being, however, food prices seem to
have grown faster than expected, whereas fuel prices and, according to preliminary calculations,
especially adjusted inflation excluding fuels, were lower than forecasted. This suggests that the
current inflationary pressures from the real economy remain moderate. Moreover, they are still
being offset by the past appreciation of the koruna.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the January 2007 inflation figures
Inflation comes in below the CNB forecast
According to figures released today, annual inflation fell to 1.3% in January 2007, from 1.7% in December last year. This means that it stayed below the lower boundary of the tolerance band set by the CNB around its target of 3%.
Starting January 2007, inflation is calculated using a new consumer basket based on 2005 weights, thus better reflecting the current household consumption structure. The weight of regulated prices and food prices, which are currently displaying above-average growth rates, has decreased in the new basket. By contrast, the share of fuel prices and adjusted inflation excluding fuels, which are recording negative or low positive growth rates, has risen. This may have slightly reduced the inflation recorded in January 2007. However, inflation will also be strongly affected over the coming two years by the fact that the weight of tobacco products has increased, which might amplify the expected effects of changes to indirect taxes. According to preliminary CNB analyses, the revision of the consumer basket should not have a significant impact overall on the forecasted path of headline inflation over the period important for monetary policy decision-making.
In month-on-month terms, the price level increased by 1% in January. As usual, some housing-related regulated prices showed particularly strong growth in January, although the rise in rents has so far been smaller than would correspond to the deregulation measures adopted. The increase in excise duty on tobacco products in April 2006 also started to pass through to prices with a considerable lag. As regards market prices, price growth was recorded especially for food and beverages, recreation and culture, and hotels and restaurants. On the other hand, fuel prices decreased. For seasonal reasons, the same was true of clothing and footwear prices.
Annual inflation in January was 0.2 to 0.3 percentage point lower than the current CNB forecast. However, the forecast was prepared using the original consumer basket, as the new one was not known at the time. This makes comparisons somewhat difficult. Correct comparisons will only be possible on the basis of more detailed data and analyses. For the time being, however, food prices seem to have grown faster than expected, whereas fuel prices and, according to preliminary calculations, especially adjusted inflation excluding fuels, were lower than forecasted. This suggests that the current inflationary pressures from the real economy remain moderate. Moreover, they are still being offset by the past appreciation of the koruna.
Tomáš Holub, Executive Director, Monetary and Statistics Department