The CNB comments on the July 2008 inflation figures
Inflation shows slight temporary rise in line with CNB forecast in July
According to figures released today, annual inflation reached 6.9% in July 2008, up by 0.2 percentage point compared to June. This means that it was again well above the upper boundary of the tolerance band set by the CNB around its target of 3%. Monetary-policy relevant inflation (4.8 % year on year in July), i.e. inflation adjusted for the first-round effects of changes to indirect taxes, also continued to fluctuate above the upper boundary of the inflation-target tolerance band. The first-round effects of changes to indirect taxes contributed more than two percentage points to headline inflation in July.
In month-on-month terms, the price level increased by 0.5% in July 2008, due mainly to a rise in prices of natural gas, the usual seasonal rise in package holiday prices and an increase in prices of tobacco products, which started to reflect the increase in excise duty with a six-month lag. By contrast, prices of clothing and footwear recorded declines owing to summer sales. Within the food category, prices of potatoes and vegetables decreased. There was also a slight decline in prices of fuels after four months of growth. Other price declines were recorded for transport equipment, mobile phones and electronics.
Overall annual inflation in July 2008 is in line with the new CNB forecast, which was discussed at the Bank Board meeting yesterday. According to preliminary calculations, there were no substantial deviations from the CNB forecast in the inflation structure either.
The fulfilment of the inflation forecast in July confirms the CNB’s previous expectations that the gradual decline in inflation observed in previous months will be interrupted temporarily during the summer months. In the summer, inflation will be adversely affected by the repercussions of the recently fast growing prices of oil on world markets (in the form of regulated prices of gas) and also by the lagged impacts of changes to indirect taxes. However, it will return to its downward path at the end of the year and is expected to fall back to low levels corresponding to the CNB’s targets in 2009. This will be aided by the unwinding of the inflationary shocks observed at the turn of this year, the ongoing decline in economic growth and the recent rapid appreciation of the koruna, which is beginning to have a strong anti-inflationary effect.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the July 2008 inflation figures
Inflation shows slight temporary rise in line with CNB forecast in July
According to figures released today, annual inflation reached 6.9% in July 2008, up by 0.2 percentage point compared to June. This means that it was again well above the upper boundary of the tolerance band set by the CNB around its target of 3%. Monetary-policy relevant inflation (4.8 % year on year in July), i.e. inflation adjusted for the first-round effects of changes to indirect taxes, also continued to fluctuate above the upper boundary of the inflation-target tolerance band. The first-round effects of changes to indirect taxes contributed more than two percentage points to headline inflation in July.
In month-on-month terms, the price level increased by 0.5% in July 2008, due mainly to a rise in prices of natural gas, the usual seasonal rise in package holiday prices and an increase in prices of tobacco products, which started to reflect the increase in excise duty with a six-month lag. By contrast, prices of clothing and footwear recorded declines owing to summer sales. Within the food category, prices of potatoes and vegetables decreased. There was also a slight decline in prices of fuels after four months of growth. Other price declines were recorded for transport equipment, mobile phones and electronics.
Overall annual inflation in July 2008 is in line with the new CNB forecast, which was discussed at the Bank Board meeting yesterday. According to preliminary calculations, there were no substantial deviations from the CNB forecast in the inflation structure either.
The fulfilment of the inflation forecast in July confirms the CNB’s previous expectations that the gradual decline in inflation observed in previous months will be interrupted temporarily during the summer months. In the summer, inflation will be adversely affected by the repercussions of the recently fast growing prices of oil on world markets (in the form of regulated prices of gas) and also by the lagged impacts of changes to indirect taxes. However, it will return to its downward path at the end of the year and is expected to fall back to low levels corresponding to the CNB’s targets in 2009. This will be aided by the unwinding of the inflationary shocks observed at the turn of this year, the ongoing decline in economic growth and the recent rapid appreciation of the koruna, which is beginning to have a strong anti-inflationary effect.
Tomáš Holub, Executive Director, Monetary and Statistics Department