Consumer price inflation experienced a slowdown in June, with inflation dropping below 10% for the first time since January 2022. ČTK analysts agree on this trend, attributing the reduction in inflation to the comparison with last year’s base, as well as the impact of a strong koruna and decreased demand. In May, inflation stood at 11.1%. The Czech Statistical Office (CZSO) will release the inflation data for June on Thursday.
Raiffeisenbank analysts estimate that annual inflation for June will be around 9.7%. They identify falling fuel prices as the primary contributor to the disinflationary process, as they have declined by over 20% compared to the previous year. This is mainly due to the high base effect from last year when fuel prices reached historical highs during the summer. The analysts also anticipate regulated prices to decrease due to cheaper electricity and gas prices on the exchanges, along with the impact of government regulations. On the other hand, food prices are contributing to sustained high inflation.
Vít Hradil, Chief Economist at Cyrrus, suggests that compared to May, there may be a slight increase in the food sector, and with the arrival of the tourist season, prices for recreation are also likely to rise. He expects continued price increases in food, accommodation services, and clothing and footwear. Conversely, the housing category is expected to stabilize, with prices potentially experiencing a slight decline. Stagnating fuel and household equipment prices should have a neutral impact on inflation compared to May. Hradil assesses that the price level has risen by 0.4% compared to May, which would translate to an annual inflation rate of 9.8%.
Česká spořitelna analysts also estimate the annual inflation for June to be at 9.8%. They highlight various anti-inflationary factors, including subdued household consumption, declining energy, fuel, and real estate prices, as well as the influence of a strong koruna weakening inflation. Although food price inflation is moderating, uncertainty remains regarding their future trajectory.
Looking ahead, Česká spořitelna analysts anticipate further inflation deceleration in the coming months, with a projected decline to 8.6% in July and 8.2% in August. They expect the rate of price growth to reach 3% at the beginning of the next year.
Source: ceskenoviny.cz
