The Czech Statistical Office (ČSÚ) reports a notable slowdown in inflation for November, registering at 7.3%, marking a 1.2 percentage point decrease from October. In a month-on-month analysis, prices demonstrated a modest increase of only 0.1%.

In a continuation of a trend from the previous month, the distortion of inflation data persists due to last year’s energy-saving tariff. Statisticians emphasize that excluding the impact of this government measure from the consumer price index, the annual inflation rate would stand at a comparatively lower “only” 4.7% today.

Year-on-year price growth witnessed weakening across various sections of the consumer basket, with food and housing experiencing particularly notable declines. In the transport sector, prices demonstrated a year-on-year decrease, primarily attributed to lower fuel prices. Pavla Šedivá, head of the CSÚ’s consumer price statistics department, provided these insights.

Despite the observed slowdown in inflation compared to October, the prices of certain commodities remain substantially higher than the same period last year. Notably, potatoes are over a quarter more expensive than in November 2022. Conversely, eggs are a quarter cheaper, and sugar prices have decreased by 18.6%.

Petr Dufek, chief economist of Creditas Bank, underscores the uncertainty surrounding next year’s inflation outlook. Factors such as how energy companies incorporate the higher regulated price component in their new price lists and the impact of elevated energy costs on businesses contribute to this uncertainty. Dufek suggests that while inflation is likely to retreat to three percent at the beginning of 2024, the pace at which it targets the two percent goal will hinge on the behavior of traders and customers. The evolving economic landscape and decision-making by key stakeholders will be instrumental in shaping the trajectory of inflation in the coming months.

Article by Prague Forum