Central Bank Reaffirms Expectations That Inflation Will Be Close To Target Early Next Year

The Czech National Bank released its comments on the latest CPI outturn, which saw inflation cool to +8.8% Y/Y in July from +9.7% prior, undershooting the central bank's forecast by 0.1pp. According to the data provided by the CNB, monetary policy-relevant inflation printed at +8.6% Y/Y (versus CNB forecast of +8.7%), while core inflation dropped to +6.8% Y/Y (versus CNB forecast of +6.9%).

• "Core inflation slowed further in July. It has been falling gradually since October 2022, reflecting a fading of growth in prices of foreign inputs and a cooling of domestic demand. The latter is acting against a further increase in the profit margins of producers, retailers and service providers. Growth in prices of both goods and services slowed."
• "The observed price developments bear out the expectations of the summer forecast that inflation will continue to fall sharply during summer. Annual inflation will slow until September. The downward trend in annual inflation will temporarily halt in October, but only as a result of the statistical effect of the energy savings tariff introduced at the end of last year. After its fade-out, inflation will fall sharply to close to the CNB’s 2% target early next year."
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