Year-on-year growth in consumer prices in the Czech Republic slowed to 12.7% in April compared to 15% in March
Inflation Overview
In the Czech Republic, year-on-year growth of consumer prices slowed down to 12.7% in April, compared to 15% in March. The Czech Statistical Office (ČSÚ) stated that, when comparing month-on-month, prices decreased by 0.2%, particularly for food, which became cheaper compared to March. The year-on-year growth rate of consumer prices has moderated for the third consecutive time, and inflation is at its lowest since last March when it also stood at 12.7%. However, while inflation is decreasing according to general expectations, food prices, on the other hand, remain difficult to predict. Surprisingly, once again, food prices did not fully correspond to the surveys among selected consumer products. In particular, egg prices (-12.9%) and vegetable prices excluding potatoes (-5%) decreased more significantly. The prices of food and non-alcoholic beverages fell by 1.6%, contrary to growth expectations. The table below illustrates the components of inflation and their respective weights. It is worth noting that the inflation dynamics, as expected, are most influenced by two components: food and non-alcoholic beverages, and utilities. Specifically, food accounts for 17.05% of the weight, while energy, water, and fuel prices account for 22.00%. These two components, which also experienced the highest price increases, help explain a significant portion of the inflation dynamics, as we will see in the following paragraph.
(data source: CZSO)
Numbers on an annual and monthly basis
On a monthly basis, consumer prices decreased by 0.2% in April. In the food and non-alcoholic beverages sector, vegetable prices decreased by 5.0%, egg prices by 12.9%, semi-skimmed milk prices by 12.3%, non-alcoholic beverage prices by 2.3%, oil and fat prices by 2.6%, poultry prices by 1.5%, sausage prices by 0.9%, and sugar prices by 4.0%. In the recreation and culture section, prices for full-service holidays decreased by 5.9%. The decline in prices in the alcoholic beverages and tobacco sector was influenced by a decrease in alcoholic beverage prices by 3.0% and wine prices by 3.1%. These figures are based on CZSO data. On an annual basis, consumer prices increased by 12.7% in April, which is 2.3 percentage points lower than in March. This slowdown in annual price growth was mainly influenced by prices in the food and non-alcoholic beverages sector and the real estate sector. In the food sector, most items in the consumer basket experienced moderated price growth.
Causes of the decrease and future predictions
Pavla Šedivá, head of the Consumer Price Statistics Department at CZSO, stated that the trend of consumer prices in April was significantly influenced by food prices, which moderated annual growth to around 17% and even decreased compared to March. This was their first monthly decrease since October 2021. The main cause of the decrease in inflation in April is indeed represented by the decline in food prices, which had increased significantly in the previous year. However, this factor is often very volatile and unpredictable, as mentioned earlier, so it should be interpreted with caution. Overall, global food prices have decreased by 20% on an annual basis in recent months, although they still remain about one-third higher than before the onset of price increases in the 2021/2022 period. Inflation forecasts for the entire year predict a level of 11%, but the most significant risk lies in next year’s inflation. While it will decrease significantly, the main uncertainty is whether it will reach the EU target of 2-3%.
Source: https://www.patria.cz/
Graphic source: https://storyset.com/
Source of images: https://pixabay.com/
