The CNB comments on the April 2012 inflation figures
Inflation comes in below the CNB forecast in April 2012
According to figures released today, the price level increased by 3.5% year on year in April 2012. Annual headline inflation thus declined compared to March. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, also fell to 2.3% and is thus still in the upper half of the tolerance band around the inflation target.
Annual headline inflation in April was 0.4 percentage point lower than the CNB’s current forecast. The downward deviation from the forecast was chiefly due to lower-than-expected food price inflation. Food prices have been difficult to predict in recent months, as the inflationary effects of some administrative measures (VAT increase, EU veterinary measures) have been counteracted by a weak demand situation and an annual decline in agricultural producer prices. The April outcome was probably affected by an earlier-than-expected price correction in some food categories (including eggs) where price increases in previous months had resulted in a marked pick-up in price growth in this segment of the consumer basket. To a lesser extent, administered prices and fuel prices continued to foster lower-than-expected inflation in April. By contrast, adjusted inflation excluding fuels was slightly above the CNB’s forecast in April, although it remained in negative territory.
The published data confirm the message of the CNB’s current forecast regarding the anti-inflationary effect of the domestic economy. The recent rise in inflation was due to several concurrent one-off factors, in particular the VAT change, growth in food prices and administered prices and the gradual pass-through of the earlier exchange rate depreciation to prices. With regard to food prices, the CNB’s forecast had expected domestic anti-inflationary pressures coupled with base effects to lead to a slowdown in their growth starting in May 2012, so the April deviation from the CNB’s forecast may be partly eliminated in the months ahead.
According to the forecast, headline inflation will be close to the current elevated levels for the rest of 2012 as a result of the VAT increase. Monetary-policy relevant inflation will be in the upper half of the tolerance band this year. Both headline and monetary-policy relevant inflation will fall slightly below the target next year.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the April 2012 inflation figures
Inflation comes in below the CNB forecast in April 2012
According to figures released today, the price level increased by 3.5% year on year in April 2012. Annual headline inflation thus declined compared to March. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, also fell to 2.3% and is thus still in the upper half of the tolerance band around the inflation target.
Annual headline inflation in April was 0.4 percentage point lower than the CNB’s current forecast. The downward deviation from the forecast was chiefly due to lower-than-expected food price inflation. Food prices have been difficult to predict in recent months, as the inflationary effects of some administrative measures (VAT increase, EU veterinary measures) have been counteracted by a weak demand situation and an annual decline in agricultural producer prices. The April outcome was probably affected by an earlier-than-expected price correction in some food categories (including eggs) where price increases in previous months had resulted in a marked pick-up in price growth in this segment of the consumer basket. To a lesser extent, administered prices and fuel prices continued to foster lower-than-expected inflation in April. By contrast, adjusted inflation excluding fuels was slightly above the CNB’s forecast in April, although it remained in negative territory.
The published data confirm the message of the CNB’s current forecast regarding the anti-inflationary effect of the domestic economy. The recent rise in inflation was due to several concurrent one-off factors, in particular the VAT change, growth in food prices and administered prices and the gradual pass-through of the earlier exchange rate depreciation to prices. With regard to food prices, the CNB’s forecast had expected domestic anti-inflationary pressures coupled with base effects to lead to a slowdown in their growth starting in May 2012, so the April deviation from the CNB’s forecast may be partly eliminated in the months ahead.
According to the forecast, headline inflation will be close to the current elevated levels for the rest of 2012 as a result of the VAT increase. Monetary-policy relevant inflation will be in the upper half of the tolerance band this year. Both headline and monetary-policy relevant inflation will fall slightly below the target next year.
Tomáš Holub, Executive Director, Monetary and Statistics Department