Czech Republic’s inflation is likely to have stalled in June on both year-on-year basis and on a sequential basis, noted Societe Generale in a research report.
While prices of fuel surged due to increasing oil prices and strong demand likely permitted prices to accelerate in the core index, weekly surveys indicated huge declines in food prices. Therefore, inflation is likely to decelerate to zero for the first time in two years.
The Czech currency is expected to depreciate in reaction to the divergence of inflation from the central bank’s target rate.
Labor market has begun reaching its limits because of a severe rebound in the past two years. Furthermore, decelerating economy and threats of future developments have been curtailing demand for new workers.