Slowing inflation will ease pressure on koruna

Czech Republic posted CPI inflation of 0.1% mom and 0.8% yoy in June. July's CPI should mildly decrease compared to the previous month. Food prices in particular are to blame. They should decrease 0.3% mom on a seasonally-adjusted basis and even more so excluding adjustments for the calendar effect. Fuel prices also have dragged down headline CPI as they follow the decreasing trend in global oil prices. 

According to Societe Generale, "Regulated prices should have a neutral impact in July, so the only upward pressure has been from the core element. Core prices should add 0.12% mom (seasonally adjusted), but this is not enough to offset the noncore items. Headline yoy inflation should drop from June's 0.8% to 0.5%. But it should accelerate towards the end of the year and hit the CNB inflationary target of 2% in the first months of 2016."