The CNB comments on the November 2008 inflation figures
Inflation comes in significantly below the CNB forecast in November
According to figures released today, annual inflation reached 4.4% in November 2008, down by 1.6 percentage points from October. This means that it was only slightly 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, returned close to the inflation target after a year-long deviation, reaching 2.7% year on year in November.
The price level declined by 0.5% in November 2008 compared to the previous month. This was mainly due to a five-month-long decline in fuel prices, which reached record figures in November. A decline was also recorded for prices of cars, some kinds of food and low-season package holidays. An increase in market rents, prices of clothing and footwear and also tobacco product prices, to which the effect of increased excise duty is still gradually feeding through, had an opposite effect on the price level.
Headline annual inflation in November 2008 was 1.1 percentage points lower than the current CNB forecast. Part of this deviation can be attributed to the price developments in October. According to preliminary calculations, this November deviation from the forecast for annual inflation was due to the evolution of fuel prices and adjusted inflation excluding food and fuel prices, i.e. all the components of market prices.
It can be said that the developments in the last two months basically imply the end of the episode of high inflation, the temporary nature of which the CNB has been emphasising throughout this year. According to the current CNB forecast, inflation will fall in 2009 to the 2% inflation target effective from January 2010. This will be aided by the subsiding of the 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 lagged effect of the rapid appreciation of the koruna in the first three quarters of the year.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the November 2008 inflation figures
Inflation comes in significantly below the CNB forecast in November
According to figures released today, annual inflation reached 4.4% in November 2008, down by 1.6 percentage points from October. This means that it was only slightly 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, returned close to the inflation target after a year-long deviation, reaching 2.7% year on year in November.
The price level declined by 0.5% in November 2008 compared to the previous month. This was mainly due to a five-month-long decline in fuel prices, which reached record figures in November. A decline was also recorded for prices of cars, some kinds of food and low-season package holidays. An increase in market rents, prices of clothing and footwear and also tobacco product prices, to which the effect of increased excise duty is still gradually feeding through, had an opposite effect on the price level.
Headline annual inflation in November 2008 was 1.1 percentage points lower than the current CNB forecast. Part of this deviation can be attributed to the price developments in October. According to preliminary calculations, this November deviation from the forecast for annual inflation was due to the evolution of fuel prices and adjusted inflation excluding food and fuel prices, i.e. all the components of market prices.
It can be said that the developments in the last two months basically imply the end of the episode of high inflation, the temporary nature of which the CNB has been emphasising throughout this year. According to the current CNB forecast, inflation will fall in 2009 to the 2% inflation target effective from January 2010. This will be aided by the subsiding of the 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 lagged effect of the rapid appreciation of the koruna in the first three quarters of the year.
Tomáš Holub, Executive Director, Monetary and Statistics Department