The CNB comments on the May 2011 inflation figures
Inflation comes in above CNB forecast in May 2011
According to figures released today, the price level increased by 2% year on year in May 2011. Headline inflation increased compared to April, standing precisely at the CNB’s inflation target level. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, rose to 1.9% in May and is just below the inflation target.
Annual headline inflation was 0.3 percentage point higher in May 2011 than the CNB’s current forecast. This deviation was due to higher-than-expected growth in food prices, which are now responding sharply and with a lag to recent buoyant growth in agricultural commodity prices and prices in the food industry. By contrast, the growth in fuel prices and regulated prices was slightly lower than expected by the CNB. According to the CZSO, the increase in the administered price of gas for households that had been announced for April, which the CNB had included in its forecast, did not materialise. Adjusted inflation excluding fuels remains negative in line with the CNB’s expectations.
Despite the above deviations, the published May inflation data are in line with the message of the current CNB forecast. According to this forecast, the inflation pressures from the domestic economy are not significant and commodity prices are currently the main source of inflation. According to CNB forecast, both headline and monetary policy-relevant inflation will be close to the inflation target over the entire forecast horizon (the planned increase in the lower VAT rate in 2012 has not yet been incorporated into the baseline scenario of the forecast).
Tomáš Holub, Executive Director, Monetary and Statistics Department
The CNB comments on the May 2011 inflation figures
Inflation comes in above CNB forecast in May 2011
According to figures released today, the price level increased by 2% year on year in May 2011. Headline inflation increased compared to April, standing precisely at the CNB’s inflation target level. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, rose to 1.9% in May and is just below the inflation target.
Annual headline inflation was 0.3 percentage point higher in May 2011 than the CNB’s current forecast. This deviation was due to higher-than-expected growth in food prices, which are now responding sharply and with a lag to recent buoyant growth in agricultural commodity prices and prices in the food industry. By contrast, the growth in fuel prices and regulated prices was slightly lower than expected by the CNB. According to the CZSO, the increase in the administered price of gas for households that had been announced for April, which the CNB had included in its forecast, did not materialise. Adjusted inflation excluding fuels remains negative in line with the CNB’s expectations.
Despite the above deviations, the published May inflation data are in line with the message of the current CNB forecast. According to this forecast, the inflation pressures from the domestic economy are not significant and commodity prices are currently the main source of inflation. According to CNB forecast, both headline and monetary policy-relevant inflation will be close to the inflation target over the entire forecast horizon (the planned increase in the lower VAT rate in 2012 has not yet been incorporated into the baseline scenario of the forecast).
Tomáš Holub, Executive Director, Monetary and Statistics Department