Czech headline inflation accelerates above expectations in January

Czech consumer price inflation accelerated above market and the central bank’s expectations in January. Sequentially, prices rose 1 percent, pushing the year-on-year rate to 2.5 percent. Even if the outcome might be slightly unexpected, the underlying reasons are not. The spiralling housing costs, which are not easy to predict, play the main role in January print. This includes the rents, reflecting the growing property prices, as well as energy prices responding to energy exchange developments. Currently, the housing costs account for over half of the current inflation, and this situation is going to persist.

Inflationary contributions of lesser magnitude include more expensive alcohol and cigarettes along with prices of personal services, reflecting not only higher demand but also associated growing wages in particular.

“We expect the inflation to maintain a higher level throughout the first quarter of this year and to start slowing down only afterwards. The figure published today stands far from the central bank’s forecast, although still within the tolerance band”, stated KBC Market Research in a report.