The CNB comments on the October 2008 inflation figures
Inflation comes in below the CNB forecast in October
According to figures released today, annual inflation reached 6% in October 2008, down by 0.6 percentage point from September. Nevertheless, inflation is still well above the upper boundary of the tolerance band set by the CNB around its target of 3%. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, also continues to fluctuate above the upper boundary of the inflation-target tolerance band, reaching 4.2% year on year in October. The first-round effects of changes to indirect taxes thus contributed almost two percentage points to headline inflation in October.
The price level was the same in October as in the previous month, with the rise in prices of some items being offset by a decline in prices of some others. The main factor underlying the month-on-month consumer price inflation was growth in prices of natural gas, heat and hot water, and tobacco products. For seasonal reasons, prices of clothing and footwear also went up. A decline in fuel prices, recorded for the fourth consecutive month, worked in the opposite direction. Prices of cars, some kinds of food and off-season package holidays fell as well.
Headline annual inflation in October 2008 was 0.4 percentage point lower than the current CNB forecast. According to preliminary calculations, this deviation was due to adjusted inflation excluding fuels, food and fuel prices, i.e. all the components of market prices. By contrast, regulated prices were slightly higher than the CNB forecast. The developments in October confirmed the CNB’s assumption that inflation would slow in the last quarter of this year and fall back to low levels consistent with the CNB’s targets in 2009. This will be aided by the unwinding of inflationary shocks observed at the turn of this year, the ongoing decline in economic growth, a decline in world and domestic commodity prices and the recent rapid appreciation of the koruna.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the October 2008 inflation figures
Inflation comes in below the CNB forecast in October
According to figures released today, annual inflation reached 6% in October 2008, down by 0.6 percentage point from September. Nevertheless, inflation is still well above the upper boundary of the tolerance band set by the CNB around its target of 3%. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, also continues to fluctuate above the upper boundary of the inflation-target tolerance band, reaching 4.2% year on year in October. The first-round effects of changes to indirect taxes thus contributed almost two percentage points to headline inflation in October.
The price level was the same in October as in the previous month, with the rise in prices of some items being offset by a decline in prices of some others. The main factor underlying the month-on-month consumer price inflation was growth in prices of natural gas, heat and hot water, and tobacco products. For seasonal reasons, prices of clothing and footwear also went up. A decline in fuel prices, recorded for the fourth consecutive month, worked in the opposite direction. Prices of cars, some kinds of food and off-season package holidays fell as well.
Headline annual inflation in October 2008 was 0.4 percentage point lower than the current CNB forecast. According to preliminary calculations, this deviation was due to adjusted inflation excluding fuels, food and fuel prices, i.e. all the components of market prices. By contrast, regulated prices were slightly higher than the CNB forecast.
The developments in October confirmed the CNB’s assumption that inflation would slow in the last quarter of this year and fall back to low levels consistent with the CNB’s targets in 2009. This will be aided by the unwinding of inflationary shocks observed at the turn of this year, the ongoing decline in economic growth, a decline in world and domestic commodity prices and the recent rapid appreciation of the koruna.
Tomáš Holub, Executive Director, Monetary and Statistics Department