Czech National Bank (CNB)

January 11, 2023

Inflation slows in December 2022

The price level increased by 15.8% year on year in December 2022. Inflation thus slowed compared with November but remained well above the upper boundary of the tolerance band around the CNB’s target. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 14.4% year on year in December. The average inflation rate for 2022 as a whole was 15.1%. The December inflation figure was more than three percentage points lower than expected in the CNB’s autumn forecast.

According to the CNB, core inflation declined in December but remains high. Food price inflation also moderated somewhat but remains high. The growth in fuel prices significantly eased year on year in December owing to oil market developments and a fall in margins in the processing and distribution chain.

The CNB expects inflation to rise again in January due to the fade-out of the effect of the energy savings tariff. According to the forecast, the cap on electricity and gas prices effective from the start of 2023, which comes after the energy savings tariff, will partly dampen administered price inflation. In the second half of the year, inflation is expected to fall to single-digit levels.

The full CNB comment is available here.

Ministry of Finance (MF)

January 4, 2023

ECOFIN approves aid to Ukraine, distributes billions for energy derusification and introduces a minimum corporate tax

During the six months of the Czech presidency of the EU, a total of five ECOFIN Council meetings were held under the leadership of the MF. Among the biggest achievements at the ECOFIN Council level are the agreement to provide EUR 24 billion in financial assistance to Ukraine, the allocation of EUR 20 billion from the RePowerEU package for the diversification of the European energy sector and the implementation of Pillar II of the OECD agreement, which introduces a minimum 15% tax for multinational companies.

The MF press release is available here (in Czech).

Czech National Bank (CNB)

December 21, 2022

The CNB keeps interest rates unchanged

At its meeting on December 21, 2022, the CNB Bank Board kept interest rates unchanged. The two-week repo rate remains at 7%, the discount rate at 6% and the Lombard rate at 8%. Five members voted in favor of this decision, and two members voted for increasing rates by half a percentage point. The Bank Board also decided that the CNB will continue to prevent excessive fluctuations of the koruna exchange rate.

Full statement available here.

Czech National Bank (CNB)

December 12, 2022

Inflation picks up pace in November 2022

The price level increased by 16.2% year on year in November 2022. Inflation thus picked up compared with October and remained well above the upper boundary of the tolerance band around the CNB’s target. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 14.8% year on year in November. The November inflation figure was more than two percentage points lower than expected in the CNB’s autumn forecast.

The inflation figure for November was affected significantly by the inclusion of government measures to help with high energy prices in inflation. In November, goods prices within core inflation slowed for the first time in a long time and growth in services prices continued to ease on account of a further drop in the contribution of owner-occupied housing in the form of imputed rent. However, food price inflation accelerated further. The growth in fuel prices eased further year on year in November. The CNB expects inflation to fall to single-digit levels around mid-2023.

Full CNB comment available here.

Czech National Bank (CNB)

December 2, 2022

GDP comes in slightly above CNB forecast in 2022 Q3

Gross domestic product adjusted for price, seasonal and calendar effects rose by 1.7% year on year in 2022 Q3. In quarter-on-quarter terms, economic activity decreased by 0.2%. The Czech economy thus grew slightly more year on year in Q3 than expected by the CNB, i.e. its quarterly decline was slightly more moderate than forecasted.

Full CNB press release available here.

Czech National Bank (CNB)

November 10, 2022

Inflation falls substantially in October 2022 due to a drop in electricity prices

The price level increased by 15.1% year on year in October 2022. Inflation thus decreased substantially compared with September, even though it remained well above the upper boundary of the tolerance band around the CNB’s target. Consumer prices adjusted for the first-round effects of changes to indirect taxes rose by 14.9% year on year in October.

The marked slowdown in inflation in October is due mainly to a substantial drop in year-on-year administered price inflation, as a result of government measures to help with high energy prices. Without these measures (an energy savings tariff approved until the end of 2022 and a waiver of the renewable sources fee until the end of 2023), inflation would be 3.5 percentage points higher in October.

The CNB expects inflation to fall to single-digit levels around mid-2023 and to return to close to its 2% target in the autumn forecast in the first half of 2024.

Full CNB comment available here.