The CNB comments on the April 2014 inflation figures
Inflation comes in slightly below the CNB forecast in April
According to figures released today, the price level increased by 0.1% year on year in April 2014. Consumer price inflation adjusted for the first-round effects of changes to indirect taxes fell slightly year on year in April. Inflation was thus still well below the lower boundary of the tolerance band around the CNB’s target.
Annual headline inflation was 0.1 percentage point lower in April 2014 than forecasted by the CNB. The slight deviation of inflation in April from the forecast was due mainly to lower-than-expected annual food price inflation. Adjusted inflation excluding fuels acted in the opposite direction, as prices in this category of goods and services edged up year on year in April, while the CNB had expected them to be flat. Prices in this segment increased slightly in April after a very long period of decline, which had moderated in recent months. The said change in adjusted inflation excluding fuels reflected the weakening of the koruna at the end of 2013 and the fading anti-inflationary effect of the domestic economy. Administered prices, fuel prices and the effects of changes to indirect taxes were virtually in line with the CNB forecast in April.
The published data continue to confirm the CNB’s opinion that the decision made in November to start using the exchange rate as an additional monetary policy instrument contributed significantly to averting the threat of deflation. As expected, headline inflation remained low but positive in April. The anti-inflationary effect of the domestic economy, which has recovered noticeably, is disappearing, while the weakened exchange rate of the koruna is continuing to push the price level upwards. According to the CNB forecast, headline inflation will increase in the near future owing to continued growth in import prices. In the longer term, it will start to reflect growth in economic activity and wages. At the start of 2015 headline inflation will thus get just above the CNB’s 2% target. Monetary-policy relevant inflation will return to the target and stay very close to it at the monetary policy horizon. Overall, average inflation will be 0.8% this year, the lowest rate in ten years, and increase to 2.2% next year, i.e. just above the CNB’s target.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the April 2014 inflation figures
Inflation comes in slightly below the CNB forecast in April
According to figures released today, the price level increased by 0.1% year on year in April 2014. Consumer price inflation adjusted for the first-round effects of changes to indirect taxes fell slightly year on year in April. Inflation was thus still well below the lower boundary of the tolerance band around the CNB’s target.
Annual headline inflation was 0.1 percentage point lower in April 2014 than forecasted by the CNB. The slight deviation of inflation in April from the forecast was due mainly to lower-than-expected annual food price inflation. Adjusted inflation excluding fuels acted in the opposite direction, as prices in this category of goods and services edged up year on year in April, while the CNB had expected them to be flat. Prices in this segment increased slightly in April after a very long period of decline, which had moderated in recent months. The said change in adjusted inflation excluding fuels reflected the weakening of the koruna at the end of 2013 and the fading anti-inflationary effect of the domestic economy. Administered prices, fuel prices and the effects of changes to indirect taxes were virtually in line with the CNB forecast in April.
The published data continue to confirm the CNB’s opinion that the decision made in November to start using the exchange rate as an additional monetary policy instrument contributed significantly to averting the threat of deflation. As expected, headline inflation remained low but positive in April. The anti-inflationary effect of the domestic economy, which has recovered noticeably, is disappearing, while the weakened exchange rate of the koruna is continuing to push the price level upwards. According to the CNB forecast, headline inflation will increase in the near future owing to continued growth in import prices. In the longer term, it will start to reflect growth in economic activity and wages. At the start of 2015 headline inflation will thus get just above the CNB’s 2% target. Monetary-policy relevant inflation will return to the target and stay very close to it at the monetary policy horizon. Overall, average inflation will be 0.8% this year, the lowest rate in ten years, and increase to 2.2% next year, i.e. just above the CNB’s target.
Tomáš Holub, Executive Director, Monetary and Statistics Department