Inflation Data Due Shortly

Czechia will report December inflation data at the top of the hour. According to a Bloomberg survey of analysts, headline inflation may have stayed at +7.3% Y/Y, while the sequential reading is expected to be flat. Meanwhile, the CNB's latest forecast suggests that inflation should decelerate to +7.0% Y/Y, albeit the November reading (+7.3%) was slightly higher than the +7.1% CNB estimate. The central bank will comment on the data at 12:00GMT/13:00CET.

• Commerzbank note that the data will likely exhibit the same benign dynamics which Polish data exhibited last week. However, they think that the data will not necessarily be viewed positively yet, with the CNB warning that January will feature a spike in the inflation rate when many businesses, services, and utilities adjust their prices upwards and these spikes have been especially strong the past couple of years.
• Goldman Sachs expect inflation to be unchanged at +7.3% Y/Y in December, with a positive contribution from a base effect in fuel prices offsetting an ongoing decline in core inflation. They expect the slowdown in sequential price pressures to continue, with annualised core momentum remaining below the CNB’s +2.0% Y/Y target. Going forward, they see headline inflation falling to +2.7% Y/Y by en-2024 and reaching the target by end-2025.
• Komercni banka write that inflation likely slowed to +6.9% Y/Y in December from +7.3% prior, as a lower comparative base from 2022 and the introduction of the energy-saving tariff may keep it elevated. They estimate that without these effects, inflation would be just above +4.0% Y/Y. They see core inflation easing to +3.5% Y/Y from +3.9%. Komercni banka stress that the uncertainty around the extent of the January repricing of goods and services remains relatively high.