Year-on-year growth in consumer prices is slowing for the second month in a row. This is even the lowest value since last April. However, according to analysts, it is still too early to celebrate.
“Most of this slowdown is influenced by the development of last year’s higher comparison base,” recalls Pavla Šedivá, head of the consumer price statistics department of the Czech Statistical Office. This is a comparison of the rate of inflation from the same month last year, when the Czech Republic already experienced a sharp rise in prices.
According to recent data from statisticians, inflation eased mainly due to transport and housing. “The observed appeasement largely results from energy prices, which were already well enough and had nowhere to grow further, transport, where the effect of cheaper fuels is involved, and recreation, where discounting after the end of the winter holiday period is the standard,” explains the Cyrrus analyst Vít Hradil.
While fuels and oils fell by 1.8 percent month-on-month in March, natural gas was down 1.4 percent.
Cheaper butter
According to Hradilo, the so-called demand categories – i.e. those determining a sustainable reduction in inflation – do not yet give many reasons for optimism. “Clothes and footwear, as well as catering and accommodation, returned to strong price growth here. Foodstuffs were not too happy either, which instead of the expected price reduction showed further price increases, albeit at a more moderate pace,” he adds.
Czechs paid almost a quarter (23.5 percent) more for food in March than a year ago. All foods from the consumer basket, which the statistical office monitors, became more expensive – with the exception of butter, which in March cost 5.4 percent less than 12 months ago.
Food prices also rose month-on-month, although only by 0.4 percent. Of this, vegetables by five percent. On the other hand, selected seasonal vegetables and fruits became cheaper. Examples are broccoli (13 percent), cauliflower (11.6 percent) or grapes (11.3 percent).
But in March, people also paid less for some non-seasonal foods – specifically, eggs were a tenth cheaper month-on-month. As the overview of Aktuálně.cz shows, prices fell for oil, processed cheese, cocoa, yogurt and coffee.
Single-digit inflation only in July
On Wednesday, the Ministry of Finance published its outlook on the expected decline in inflation. It should fall below the 10 percent mark in July. This year’s minimum is expected by the ministry in September, when inflation should reach 7.1 percent. It should drop to 2.5 percent at the beginning of next year.
Most estimates expect single-digit inflation in the second half of this year. “Double-digit inflation will recede this year and we will finally be able to get used to the new price level, which will hopefully stay with us for a longer time,” adds Mücková.
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