Local Analysts Flag That CPI Deceleration Was Driven By Volatile Food Component

Czech news wires CTK runs comments from local analysts who point out to the fact that the bigger-than-expected cooling in headline inflation was mostly due to the volatile "food and non-alcoholic beverages" component, something we flagged in our initial reaction. The category makes up 17.8% of the underlying inflation basket.

• CTK cited Cyrrus Chief Economist Vit Hradil as noting that the April outturn was "solely due to the food category," while "traditionally food is volatile and does not have much predictive value in relation to overall inflationary pressures."
• Czech Banking Association Chief Economist Jakub Seidler added that "a number of items continue to show solid m/m growth and are anti-inflationary," while the full-year inflation may be "around +11% Y/Y this year."
• Miroslav Novak, an analyst with Akcenta, told the CTK that "we can expect a continued slowdown in consumer inflation over the coming months," while full-year inflation may be slightly below +11% Y/Y.
• Meanwhile, J&T Banka Chief Economist Petr Sklenar wrote that "apart from food inflation, the inflation data was without significant surprises," while "headline inflation could fall below +10% Y/Y during the summer" and "annual average inflation should be around +11%-12% Y/Y this year."