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Industrial PPI Inflation Cools, Fiscal Consolidation Package Clears Parliament

  • Czechia's industrial PPI slowed to +0.8% Y/Y in September from +1.8% prior versus +1.0% expected. The continued cooling of factory-gate price pressures bode well for wider disinflation, with the CNB expecting consumer price inflation to approach the +2.0% Y/Y target in early 2024.
  • Seznam Zpravy reported that members of the government see Prime Minister Petr Fiala as a "moderator" and "master of compromise" who manages to defuse tensions within the multi-party ruling coalition.
  • Parliament approved a contentious fiscal consolidation package which is expected to reduce the fiscal gap by CZK150bn over the next two years, bringing it to 2.2% of GDP in 2024 and to 1.7% of GDP in 2025.
  • S&P Global Ratings affirmed Czechia at AA with a stable outlook but warned that "the government's budgetary consolidation measures may not sufficiently improve structural budget deficits because of increased defence expenditure and social spending".

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