Czech Republic’s June consumer prices flat on year-on-year basis

Czech consumer prices rose in June by 0.1 percent from May 2016. The rise was mainly because of increased prices of transport and recreation and culture. On a year-on-year basis, consumer prices stagnated in June, remaining at 0.1 percent, according to Czech Statistical Office.

The monthly increase in consumer prices in transport spurred from the 4 percent rise in prices of automobile fuel. Within recreation and culture, package holidays’ prices were particularly up by 1.3 percent.

Meanwhile, decline in the price level was mainly due to drop in food and non-alcoholic beverages’ prices. Prices of vegetables fell 2.9 percent, of which prices of vegetables cultivated for their fruit declined by 15.1 percent, noted Czech Statistical Office.

Within clothing a footwear category, garments prices fell 1 percent, whereas prices of shoes and other footwear remained unchanged. Overall, prices of goods rose 0.1 percent, while prices of services also increased 0.1 percent.

The stagnation in price can be attributed to deceleration in price drop in transport and because of intensified price drop in food and non-alcoholic beverages.

Within transport, the drop in prices of automotive fuel decelerated to 10.2 percent in June from 12.9 percent in May. Meanwhile, fruit prices declined 5.7 percent, whereas price growth of vegetables decelerated to 2.1 percent in June from May’s 4.1 percent.

According to Czech Statistical Office, the largest influence on the “growth of the y-o-y price level in June came from prices in 'alcoholic beverages and tobacco' due to the increase in prices of tobacco products and alcoholic beverages (5.1 percent and 2.5 percent, respectively)”.

Overall, prices of goods in total dropped 0.7 percent, whereas prices of services increased 1.2 percent.

All in all, inflation continues to be slightly above the recent projection of the Czech National Bank. Even if inflation is likely to remain close to current levels in the coming months, the CNB is unlikely to take any policy action, noted KBC Market Research in a research report.

The CNB is expected to be content with the economy since inflation moves in sync with projections and the latest prints also indicated certain rebound in wage dynamics, added KBC Market Research.