While in previous months the level of inflation in the Czech Republic was largely equivalent to that in the EU, in January the consumer price index exceeded the eurozone’s average, the Czech Statistics Agency announced on Monday.
Eurozone inflation was at 5.1 percent in January. Meanwhile, in the Czech Republic, it reached 9.9 percent.
It is expected that inflation next year could be between 8.6 and 10.9 percent on average and as high as 11 percent. This is due to higher energy prices, and change in price lists of goods and services and the expected rise in food prices.
In December, annual inflation was 6.6 percent, and according to CZSO data, annual inflation was above ten percent last time in July 1998.
“It is difficult to estimate because prices are constantly changing in the economy. This year, it is all the more complicated, as price pressures are very widespread and the revaluation of January prices can be really significant, “said Jakub Seidler, chief economist of the Czech Banking Association.
He says that a 30% year-on-year increase in electricity and gas prices can be expected, as well as a significant increase in food prices. “It is thus very likely that year-on-year inflation will reach over ten percent, and we rather expect a value close to 11 percent, ” he added.
According to Akcento analyst Miroslav Novák, estimating January consumer inflation is always a bit of a lottery. “For the beginning of the new year, companies regularly adjust the price lists and this year’s upward changes in prices for goods and services were really drastic. He expects January inflation at 10.2 percent.
The increase in the prices of other items such as heat, fuels or water and sewage could also be stronger than usual at the beginning of the year.
Food prices have probably also risen significantly, “he said. He added that probably the only significant break on inflation was a temporary reduction in fuel prices. Rožumberský expects a January inflation of 8.6 percent.
It is warned that January inflation will also be important from the perspective of the Czech National Bank. They expect inflation of 9.4 percent in January.
“In the event of faster inflation, it cannot be ruled out that the CNB will increase interest rates by 0.25 percentage points in March,” he said.
