On Wednesday, August 23, the Czech government approved measures to help households cope with high inflation ahead of the coming winter season.

Czech Prime Minister Petr Fiala said in a statement following a government meeting that the inflation assistance package totaled 177 billion Czech crowns (7.15 billion U.S. dollars).

According to the European Union (EU) Independent Fiscal Institutions Network, the Czech Republic has the fourth-highest amount of assistance relative to gross domestic product (GDP) in the EU, Fiala said.

The aid package includes energy-saving tariff and the remission of fees for renewable energy sources, according to the prime minister. Targeted support is also designed for more vulnerable groups, including a 5,000-crown allowance to families with children and a 2,500-crown increase in pensions.

Fiala said that his government also tasked the Ministry of Industry and Trade with preparing updated estimates for energy price increases so that assistance could match real costs.

“If, despite all these measures, some people find themselves in a difficult life situation, a series of other measures are prepared as part of assistance in material distress, such as housing allowance, extraordinary immediate assistance, subsistence allowance, etc.,” Fiala said, noting the need for a common European response to rising energy costs.

Inflation in the central European country reached a dizzying 17.5 percent in July, according to figures published by the Czech Statistical Office (CSU), with most of the blame put on soaring energy prices.

Amid the ongoing Russia-Ukraine conflict, Prague has vowed a tough stance against Russia — including sanctions and potentially halting critical gas imports from Moscow altogether, which many speculate would further drive up inflation.

The Czech finance ministry has conducted a theoretical analysis that shows an embargo on Russian gas would hurt the Czech economy next winter.

According to the analysis, the country’s GDP in 2023 would fall by up to 2.9 percent in that scenario and then by up to 1.6 percent in 2024. This year, however, households and industry would not be in danger thanks to sufficient reserves. (1 U.S. dollar = 24.76 Czech crowns)

Article By Prague Forum