Komercni Banka See Inflation Averaging At +2.8% Y/Y In 2024

Following the release of Czechia's softer-than-expected inflation data, Komercni banka (who correctly predicted the below-consensus annual reading) write that "it continues to be true that year-on-year inflation is held higher by the lower comparative base at the end of 2022, when the effect of the energy-saving energy tariff was in effect" and without this effect "inflation in December would have been 4.2%".

• They note that on a month-on-month basis, food prices fell faster than expected, while core inflation was slightly higher than forecast. They see core inflation for December at +3.6%-3.7% Y/Y, with the official reading to be confirmed in the upcoming statement from the CNB.
• They write that the data for January "should show a significant decrease, the only question is how strong it will be" as consumer demand remains subdued, but regulated energy prices increased sharply at the beginning of the year, while the VAT rate for a number of services has been hiked significantly. They expect inflation to average at +2.8% Y/Y this year.