The CNB comments on the November 2015 inflation figures
Inflation comes in below CNB forecast in November
According to figures released today, the price level increased by 0.1% year on year in November 2015. Consumer prices adjusted for the first-round effects of changes to indirect taxes were flat year on year in November. Inflation is thus still well below the CNB’s target, or below the lower boundary of the tolerance band around the target.
Annual headline inflation was 0.5 percentage point lower in November than forecasted by the CNB. This deviation was predominantly due to food prices, whose annual growth almost halted in November, remaining far behind the CNB’s expectations. A somewhat deeper-than-forecasted annual decline in administered prices and fuel prices acted in the same direction, albeit to a lesser extent. Slightly higher adjusted inflation excluding fuels affected the deviation from the forecast in the opposite direction. This indicator of core inflation is being affected by growth in the domestic economy and wages and by depreciation of the koruna against the dollar. This effect is being largely offset by a continued decline in foreign producer prices. The impacts of indirect tax changes were in line with the forecast.
The released data continue to confirm low inflation in the Czech economy this year. According to the CNB forecast, inflation will gradually increase, hitting the 2% target at the monetary policy horizon and being slightly above it in 2017. This will reflect an unwinding of the anti-inflationary effect of import prices, which are currently decreasing due to a fall in producer prices in the euro area and in global commodity prices. Import prices will be slightly inflationary in the second half of next year. The growing domestic economy will foster higher costs and consequently higher consumer prices over the entire forecast horizon, mainly via accelerating wage growth and rising prices of other inputs.
Tomáš Holub, Executive Director, Monetary Department
The CNB comments on the November 2015 inflation figures
Inflation comes in below CNB forecast in November
According to figures released today, the price level increased by 0.1% year on year in November 2015. Consumer prices adjusted for the first-round effects of changes to indirect taxes were flat year on year in November. Inflation is thus still well below the CNB’s target, or below the lower boundary of the tolerance band around the target.
Annual headline inflation was 0.5 percentage point lower in November than forecasted by the CNB. This deviation was predominantly due to food prices, whose annual growth almost halted in November, remaining far behind the CNB’s expectations. A somewhat deeper-than-forecasted annual decline in administered prices and fuel prices acted in the same direction, albeit to a lesser extent. Slightly higher adjusted inflation excluding fuels affected the deviation from the forecast in the opposite direction. This indicator of core inflation is being affected by growth in the domestic economy and wages and by depreciation of the koruna against the dollar. This effect is being largely offset by a continued decline in foreign producer prices. The impacts of indirect tax changes were in line with the forecast.
The released data continue to confirm low inflation in the Czech economy this year. According to the CNB forecast, inflation will gradually increase, hitting the 2% target at the monetary policy horizon and being slightly above it in 2017. This will reflect an unwinding of the anti-inflationary effect of import prices, which are currently decreasing due to a fall in producer prices in the euro area and in global commodity prices. Import prices will be slightly inflationary in the second half of next year. The growing domestic economy will foster higher costs and consequently higher consumer prices over the entire forecast horizon, mainly via accelerating wage growth and rising prices of other inputs.
Tomáš Holub, Executive Director, Monetary Department