The CNB comments on the January 2010 inflation figures
Inflation comes in slightly below the CNB’ s forecast in January 2010
According to figures released today, the price level increased by 0.7% year on year in January 2010. Compared to the end of 2009, inflation thus declined at the beginning of this year and was below the lower boundary of the tolerance band around the CNB’s new 2% target valid since the beginning of 2010. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, was -0.3% in January.
Changes to indirect taxes, made as part of a set of measures aimed at reducing the state budget deficit, were the main driving force of month-on-month consumer price inflation, which stood at 1.2% in January. According to the CZSO’s tentative calculations, a rise in the basic and lower VAT rates from 19% to 20% and from 9% to 10% respectively and an increase in excise duties on fuels and alcoholic beverages made a contribution of 1 percentage point to the month-on-month increase in the CPI in January. This is roughly in line with the CNB’s forecast.
Annual headline inflation was 0.2 percentage point lower in January 2010 than the CNB’s current forecast. The deviation in inflation from the forecast in January was due mainly to lower adjusted inflation excluding fuels. Fuel prices, conversely, recorded higher-than-expected growth. The forecast for food prices and regulated prices was approximately fulfilled.
Despite the slight deviation from the forecast, the inflation observed in January is in line with the overall message of the current forecast. According to this forecast, headline inflation will rise during 2010, getting just above the CNB’s target of 2% in the second half of the year as a result of tax changes. At the monetary policy horizon, i.e. in 2011 H1, headline inflation will be close to the inflation target. Monetary-policy relevant inflation will be below headline inflation from the start of this year (owing to the changes to indirect taxes). It will thus approach the CNB target from below over the monetary policy horizon.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the January 2010 inflation figures
Inflation comes in slightly below the CNB’ s forecast in January 2010
According to figures released today, the price level increased by 0.7% year on year in January 2010. Compared to the end of 2009, inflation thus declined at the beginning of this year and was below the lower boundary of the tolerance band around the CNB’s new 2% target valid since the beginning of 2010. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, was -0.3% in January.
Changes to indirect taxes, made as part of a set of measures aimed at reducing the state budget deficit, were the main driving force of month-on-month consumer price inflation, which stood at 1.2% in January. According to the CZSO’s tentative calculations, a rise in the basic and lower VAT rates from 19% to 20% and from 9% to 10% respectively and an increase in excise duties on fuels and alcoholic beverages made a contribution of 1 percentage point to the month-on-month increase in the CPI in January. This is roughly in line with the CNB’s forecast.
Annual headline inflation was 0.2 percentage point lower in January 2010 than the CNB’s current forecast. The deviation in inflation from the forecast in January was due mainly to lower adjusted inflation excluding fuels. Fuel prices, conversely, recorded higher-than-expected growth. The forecast for food prices and regulated prices was approximately fulfilled.
Despite the slight deviation from the forecast, the inflation observed in January is in line with the overall message of the current forecast. According to this forecast, headline inflation will rise during 2010, getting just above the CNB’s target of 2% in the second half of the year as a result of tax changes. At the monetary policy horizon, i.e. in 2011 H1, headline inflation will be close to the inflation target. Monetary-policy relevant inflation will be below headline inflation from the start of this year (owing to the changes to indirect taxes). It will thus approach the CNB target from below over the monetary policy horizon.
Tomáš Holub, Executive Director, Monetary and Statistics Department