The CNB comments on the November 2014 inflation figures
Inflation comes in slightly below CNB forecast in November
According to figures released today, the price level increased by 0.6% year on year in November 2014. Consumer price inflation adjusted for the first-round effects of changes to indirect taxes reached 0.5% year on year in November. Inflation is thus still below the lower boundary of the tolerance band around the CNB’s target.
Annual headline inflation was 0.2 percentage point lower in November than forecasted by the CNB. This deviation of inflation from the forecast was due primarily to a smaller-than-expected effect of changes to indirect taxes, as the CNB’s assumption that the higher excise duty on tobacco would affect cigarette prices in the autumn months did not materialise. In addition, slightly lower annual food price inflation, fuel price inflation and adjusted inflation excluding fuels were recorded in November, similarly as in October. By contrast, administered prices in November were in line with what the CNB had expected.
The published data continue to confirm the CNB’s opinion that the decision made last year to start using the exchange rate as an additional monetary policy instrument contributed significantly to averting the threat of deflation. The weakened exchange rate is still feeding through to inflation via import prices. Moreover, the domestic economy is now pushing prices upwards. By contrast, very subdued inflation in the euro area and falling global prices of agricultural and energy commodities are having an anti-inflationary effect. According to the forecast, headline inflation will go up owing mainly to rising economic activity and accelerating wage growth. By contrast, the inflationary effect of import prices will fade. Both headline and monetary-policy relevant inflation will return to the CNB’s 2% target in early 2016, i.e. at the monetary policy horizon. They will then be slightly above the target.
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the November 2014 inflation figures
Inflation comes in slightly below CNB forecast in November
According to figures released today, the price level increased by 0.6% year on year in November 2014. Consumer price inflation adjusted for the first-round effects of changes to indirect taxes reached 0.5% year on year in November. Inflation is thus still below the lower boundary of the tolerance band around the CNB’s target.
Annual headline inflation was 0.2 percentage point lower in November than forecasted by the CNB. This deviation of inflation from the forecast was due primarily to a smaller-than-expected effect of changes to indirect taxes, as the CNB’s assumption that the higher excise duty on tobacco would affect cigarette prices in the autumn months did not materialise. In addition, slightly lower annual food price inflation, fuel price inflation and adjusted inflation excluding fuels were recorded in November, similarly as in October. By contrast, administered prices in November were in line with what the CNB had expected.
The published data continue to confirm the CNB’s opinion that the decision made last year to start using the exchange rate as an additional monetary policy instrument contributed significantly to averting the threat of deflation. The weakened exchange rate is still feeding through to inflation via import prices. Moreover, the domestic economy is now pushing prices upwards. By contrast, very subdued inflation in the euro area and falling global prices of agricultural and energy commodities are having an anti-inflationary effect. According to the forecast, headline inflation will go up owing mainly to rising economic activity and accelerating wage growth. By contrast, the inflationary effect of import prices will fade. Both headline and monetary-policy relevant inflation will return to the CNB’s 2% target in early 2016, i.e. at the monetary policy horizon. They will then be slightly above the target.
Tomáš Holub, Executive Director, Monetary and Statistics Department