The latest reports on Czech inflation indicate that it has experienced a further decline in September, following a decrease of at least one percentage point from the previous month’s 8.5 percent. Analysts concur on this trend, highlighting reductions in both year-on-year and month-on-month prices. Estimates suggest that prices have dropped by 0.2 to 0.4 percentage points compared to August. While food prices are expected to decrease, there has been an increase in the cost of fuel. Official inflation data from the Czech Statistical Office (ČSÚ) is scheduled to be released on Tuesday.

Analysts from Komerční banka suggest that the year-on-year inflation rate has decreased to 7.2 percent, down from 8.5 percent in August. This corresponds to an average monthly decrease of 0.4 percent. They attribute this decline to lower regulated prices and cheaper food. The first wave of significant price reductions in household energy costs is also expected to be reflected in regulated prices.

Despite the overall decline, fuel prices have continued to rise in September due to higher oil prices and a weak exchange rate of the Czech koruna. However, other categories have contributed to lower inflation. Food prices are gradually decreasing following a sharp decline in agricultural producer prices. Additionally, recreation expenses are expected to reduce significantly after the end of the holiday season, according to Vít Hradil, the chief economist at Cyrrus.

In summary, anti-inflation factors are expected to prevail, resulting in a monthly decline of 0.3 percent in overall price levels. This would correspond to a year-on-year inflation rate of 7.3 percent.

In related news, Raiffeisenbank analysts anticipate a decrease in inflation to 7.5 percent in September. They attribute this decline to a slowdown in energy and food prices year-on-year growth. Given the previous results of agricultural producer prices, there is still potential for a further reduction in food prices.

Looking ahead, inflation is projected to increase in October. Analysts from Česká spořitelna predict that it will surpass nine percent. However, this increase is not driven by economic developments but rather by the low base effect resulting from last year’s cost-saving tariff, significantly reducing electricity prices. It is worth noting that inflation is expected to return downward in the following months, with a sharp decline anticipated in January. The evolving inflation dynamics pose challenges for the Czech economy and will be closely monitored by policymakers and businesses alike.

Article by Prague Forum