Inflation in the Czech Republic slowed in May thanks to lower food prices. Analysts see positive signs in several consumer categories, with forecasts for a further decrease in the coming months. The country’s position in the European inflation ranking improved. However, electricity costs and price dynamics in foreign trade remain to be monitored. <\/p>\n\n\n\n
Overall, compared to last May, food and alcoholic beverages have become 3.7% cheaper. In fact, CSO data show that flour and eggs, for example, have become significantly cheaper, with prices falling by 23.5% in both cases. Fruits decreased in cost by 6.7%, even meat cost 5.8% less.<\/p>\n\n\n\n
The prices of goods and services in May increased by a total of 0.9 %, with services increasing by 5.3 %. According to statisticians, the year-on-year increase in the price level in May was mainly due to housing. In particular, rents increased by 7.2 %, goods and services for the routine maintenance of a house became 4.6 % more expensive, water and sewerage costs rose by 10.9 % and 10.5 % respectively, and electricity increased by 11.1 %, while heating and hot water by 3.6 %.<\/p>\n\n\n\n
On the other hand, natural gas prices decreased by 6.6% year-on-year, and solid fuels became cheaper by 3.9%. Fuel also increased, up almost 11%. In addition, alcohol and tobacco became more expensive. Finally, the prices of food services increased by 7.5 % and those of accommodation services by 10.2 %.<\/p>\n\n\n\n
Vladim\u00edr Klime\u0161, head of the CSO’s Department of Industrial Prices and Foreign Trade Statistics, said that, on an annual basis, export prices increased by 4.9% and import prices by 3.5%. The Czech Republic faced double-digit inflation in 2022 and 2023, falling below 10% only last June. This year, inflation reached the CNB’s 2% target in February, after rising to 2.3% in January. However, two months later, inflation rose again, reaching the upper limit of the central bank’s tolerance band. For the year as a whole, the CNB expects an average inflation of 2.3%, while the Ministry of Finance forecasts an average inflation of 2.7%. <\/p>\n\n\n\n
On a monthly basis, the prices of goods decreased overall by 0.2%, while the prices of services increased by 0.2%. Pavla \u0160ediv\u00e1 stated that the overall price level in May was unchanged from the previous month. In most consumer goods categories, there were only minimal price movements that offset each other.<\/p>\n\n\n\n
Compared to April, fuel became 1.8 % cheaper, household appliances 1.6 % cheaper and prices of goods and services for routine household maintenance decreased by 1.1 %. Statisticians also noted that the price development of the recreational and cultural sector was influenced by a 1.7 % drop in the prices of all-inclusive holiday packages. In contrast, prices for food and accommodation services increased. The CZSO also published information on price trends in foreign trade in April. In April, export and import prices were significantly influenced by the strong depreciation of the koruna against the euro and the dollar. On a monthly basis, the prices of exported goods increased by 0.8%, while those of imported goods rose by 0.4%. <\/p>\n\n\n\n
In May, the Czech Republic slightly improved its position in the European inflation ranking. According to an analysis by the investment platform Portu, in April the Czech Republic ranked 21st out of 41 countries surveyed, whereas it was previously ranked 23rd.<\/p>\n\n\n\n
In May, the highest inflation in Europe was recorded in Russia, where it reached 7.9 %. Iceland, with 6.2%, Belarus, with 5.7%, and Montenegro, with 5.5%, also faced high inflation. The lowest year-on-year consumer price inflation in May was recorded in Latvia, with 0.1%, followed by Lithuania with 0.5% and Italy with 0.8%.<\/p>\n\n\n\n
Among the neighbouring countries, inflation was higher than in the Czech Republic only in Austria, where it reached 3.3%. Consumer prices rose by 2.5% year-on-year in Poland, 2.4% in Germany and 2.3% in Slovakia. Like the Czech Republic, the euro area as a whole recorded annual inflation of 2.6 %, with consumer prices up 0.2 % age points compared to April. <\/p>\n\n\n\n
Analysts agree that inflation slowed down more than expected in May. This slowdown was mainly due to the year-on-year decrease in food prices. April’s acceleration of inflation was slightly corrected by new data, and May’s inflation was only slightly higher than the CNB’s original estimate of 2.5 %. Jakub Seidler, chief economist of the Czech Banking Association, said that without the impact of food prices, annual inflation would have been 3.9%.<\/p>\n\n\n\n
According to V\u00edt Hradil, chief economist at Cyrrus, other consumer price categories are also showing positive developments. This is happening against a backdrop of renewed real wage growth and a revival in consumer demand, probably attributable to favourable cost developments in the corporate sector and falling profit margins imposed by increased consumer price sensitivity.<\/p>\n\n\n\n
Petr Dufek, chief economist at Creditas Bank, noted that inflation is still quite high and could fall to 2 % in the coming months. However, he believes that what matters most is where inflation will go in a year or so. Dufek said he was surprised that electricity continues to become more expensive, despite the fact that electricity prices on the exchanges have fallen significantly and the price lists submitted by energy companies are much more favourable than last year. According to him, this price reduction will only come into effect after a long delay, probably in the second half of this year. Patrik Ro\u017eumbersk\u00fd, an economist at UniCredit Bank, said that only in December inflation could be close to 3 % due to the unusually low prices in December last year.<\/p>\n\n\n\n