In a significant development for the Czech economy, consumer prices in the country declined by 1.6 percentage points in September compared to the previous month, marking the lowest level since December 2021. This decline was reported by Pavla Šedivá, Head of the Department of Consumer Prices at the Czech Statistical Office (CSU).

A month-on-month comparison revealed that consumer prices decreased by 0.7% in September. This drop was primarily driven by lower prices in categories such as “recreation and culture,” “food and non-alcoholic beverages,” and “housing, water, electricity, gas, and other fuels.”

In the “recreation and culture” category, prices saw a significant decline of 21.9%, mainly attributed to the end of the summer season affecting package holiday prices. “Food and non-alcoholic beverages” also experienced lower prices, with notable decreases in fruit prices (3.8% decrease), vegetable prices (2.9% decrease, with potatoes down by 2.7%), and egg prices (9.2% drop). Additionally, prices in the “housing, water, electricity, gas, and other fuels” category decreased primarily due to lower prices for natural gas (down 3.6%), electricity (down 2.0%), and solid fuels (down 1.3%). However, transport prices increased, primarily due to previously higher fuel prices. Goods prices increased by 0.7%, while service prices rose by 0.8%.

Year-on-year, consumer prices increased by 6.9% in September, marking a decrease of 1.6 percentage points compared to August. This slowdown was primarily observed in the categories of “housing, water, electricity, gas, and other fuels” and “food and non-alcoholic beverages.”

The largest impact on year-on-year price levels in September came from “housing, water, electricity, gas, and other fuels,” where prices for rentals, water supply, sewage collection, and heating increased significantly. “Food and non-alcoholic beverages” also played a significant role, with notable price increases for potatoes and sugar.

The inflation rate, which measures the average consumer price increase over the past twelve months, stood at 12.7% in September, down from 13.6% in August. The Overall Consumer Price Index, excluding housing costs, was at 107.7% year-on-year, with prices of goods increasing by 7.0% and services seeing a 6.7% increase.

Comparing Czech Republic’s inflation situation with other European Union (EU) member states, the Harmonized Index of Consumer Prices (HICP) decreased by 0.8% month-on-month but increased by 8.3% year-on-year in September. Eurostat’s flash estimates reported a year-on-year change of 4.3% for the Monetary Union Index of Consumer Prices (MUICP) in September 2023. Slovakia recorded the highest inflation at 8.9%, while the Netherlands had the lowest at 0.3%. Across EU27 member states, the average HICP change in August was 5.9%, with Hungary experiencing the highest inflation at 14.2% and Denmark the lowest at 2.3%.

Article by Prague Forum