Czech Central Bank Confirms That Inflation Missed Its Forecast In May

The Czech National Bank says that inflation "slowed markedly further but remained well above the upper boundary of the tolerance band around the CNB’s target" in May after data from the Czech Statistics Office showed that consumer prices rose by 11.1% Y/Y, which exceeded the +10.8% median estimate in a Bloomberg survey.

• "The May inflation figure was 0.5 percentage point lower than expected in the CNB’s spring forecast. This was due mainly to weaker-than-expected core inflation and, to a lesser extent, slower annual food price inflation and a deeper decline in fuel prices. Somewhat faster growth in administered prices affected the deviation from the forecast in the opposite direction."
• "Core inflation eased further in May, reaching single figures. It has been falling for a number of months, reflecting a fading of foreign producer price inflation and a cooling of domestic demand. The latter is causing a gradual correction of the until recently increasing profit margins of producers, retailers and service providers."
• "The observed price developments bear out the expectations of the spring forecast that inflation will continue to decline quickly during spring and summer. Year-on-year price growth will also slow quickly in the months ahead. Annual consumer price inflation will fall to single digits in the summer months. It will decline to the CNB’s 2% target over the monetary policy horizon, i.e. in 2024 Q2 and Q3."
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