The agricultural sector in the Czech Republic has witnessed a significant and consistent decline in producer prices over the last four months, with the trend accelerating each month. In August, agricultural producer prices experienced a sharp year-on-year decrease of 16.4%, following drops of 10.2% in May, 13.8% in June, and 14.3% in July.

Plant production saw a staggering 26.2% year-on-year price decrease, while animal production faced a 2.4% dip. Among specific agricultural products, edible oils and cereals reduced prices by approximately a third, while vegetables saw significant increases, with potatoes soaring by almost 83%.

Leading economists in the Czech Republic argue that food producers and retailers should reflect this decline in agricultural producer prices by lowering their own prices for consumers. Štěpán Křeček, a prominent economist at BHS, stated that grocery stores should not exploit their position at the expense of consumers and should adjust their food prices accordingly, especially considering the improving situation in energy markets.

Globally, food prices experienced a decline in August, with the exception of rice, which reached its highest price in 15 years. Analysts believe that the continued decline in agricultural producer prices should contribute to lower inflation in the coming months, and if this doesn’t happen, it may lead to a debate over who is responsible for high food prices, with farmers potentially being exempted from the question.

The agricultural data has been seen as particularly positive and significant, as it exceeded the usual seasonality, especially in plant production, according to Jakub Seidler, the Czech Banking Association’s chief economist.

In contrast, industrial producer prices in the Czech Republic showed a slight year-on-year rise, increasing from 1.4% in July to 1.8% in August. Prices increased significantly compared to the previous year for electricity, gas, steam, and air conditioning (almost 12%), coal and lignite (73%), and other non-metallic mineral products (by a tenth).

However, the construction sector experienced a slowdown in year-on-year price growth in August, with construction work prices slowing down to 4.8% from 4.8% in July. Costs of materials and products used in construction increased by 0.2% in August.

For businesses, market service prices were 5.3% higher year-on-year in August, slightly down from 5.6% in July. Employment service prices rose by 23%, and real estate services increased by 7%. Month-on-month, prices of market services for businesses increased by 0.6%, mainly due to a rise in advertising services and market research by 7%, as reported by statisticians.

Article by Prague Forum