The CNB comments on the December 2008 inflation figures
Inflation in December 2008 is within the tolerance band around the CNB’s target and markedly below its forecast
According to figures released today, annual inflation was 3.6% in December 2008, down by 0.8 percentage point from November. This means that it returned below the upper boundary of the tolerance band set by the CNB around its target of 3%, following a year-long deviation. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, fell markedly below the inflation target, reaching 1.8% year on year in December.
The price level declined by 0.3% in December 2008 compared to the previous month. This was due mainly to a large decrease in fuel prices, lower prices of some types of food and a decline in prices of medicines. An increase in prices of heat and hot water and tobacco product prices, to which the effect of increased excise duty is still gradually feeding through, had an opposite effect on the price level. Prices of transport services rose as well.
Headline annual inflation in December 2008 was 1.5 percentage points lower than the current CNB forecast prepared in October 2008. Part of this deviation can be attributed to the price developments in October and November. According to preliminary calculations, annual inflation in December was lower than expected due chiefly to the evolution of fuel prices. However, adjusted inflation excluding fuels and food prices were also significantly below the forecast. By contrast, the annual increase in regulated prices was slightly higher than forecasted by the CNB.
It can be said that the episode of high inflation, which characterised the first three quarters of 2008, has come to a rapid halt. The CNB stressed the temporary nature of that episode throughout 2008, but it has subsided even faster than the CNB expected, owing mainly to the fall in world prices of oil and food.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the December 2008 inflation figures
Inflation in December 2008 is within the tolerance band around the CNB’s target and markedly below its forecast
According to figures released today, annual inflation was 3.6% in December 2008, down by 0.8 percentage point from November. This means that it returned below the upper boundary of the tolerance band set by the CNB around its target of 3%, following a year-long deviation. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, fell markedly below the inflation target, reaching 1.8% year on year in December.
The price level declined by 0.3% in December 2008 compared to the previous month. This was due mainly to a large decrease in fuel prices, lower prices of some types of food and a decline in prices of medicines. An increase in prices of heat and hot water and tobacco product prices, to which the effect of increased excise duty is still gradually feeding through, had an opposite effect on the price level. Prices of transport services rose as well.
Headline annual inflation in December 2008 was 1.5 percentage points lower than the current CNB forecast prepared in October 2008. Part of this deviation can be attributed to the price developments in October and November. According to preliminary calculations, annual inflation in December was lower than expected due chiefly to the evolution of fuel prices. However, adjusted inflation excluding fuels and food prices were also significantly below the forecast. By contrast, the annual increase in regulated prices was slightly higher than forecasted by the CNB.
It can be said that the episode of high inflation, which characterised the first three quarters of 2008, has come to a rapid halt. The CNB stressed the temporary nature of that episode throughout 2008, but it has subsided even faster than the CNB expected, owing mainly to the fall in world prices of oil and food.
Tomáš Holub, Executive Director, Monetary and Statistics Department