Most Expect January CPI To Print Within CNB Target, Scale Of Seasonal Repricing Eyed

Czechia will release its closely watched January CPI data on Thursday at 08:00GMT/09:00BST, which will reveal the scale of the traditional repricing of goods and services at the beginning of the year. Early signals from the CNB, who base their analyses on high-frequency data imported directly from e-commerce firms and major retailers, suggested that concerns over a potential "explosion" of prices may have been premature. The CNB will release its comments on inflation data, including an estimate of core inflation, later on Thursday (12:00GMT/13:00CET)

• On the eve of the release of the data, Bloomberg consensus looks for a deceleration of headline inflation to +2.9% Y/Y from +6.9% recorded in December. On a sequential basis, inflation may have rebounded to +2.0% M/M from -0.4%, due to traditionally elevated seasonal effects. The CNB's fresh forecast sees inflation at +3.0% Y/Y in January, which coincides with the upper end of the +/- 1pp tolerance band around the +2.0% target. Circling back to the Bloomberg poll, 18 out of the 21 forecasts supplied by economists fall within the CNB's target band.
• Goldman Sachs expect inflation to ease to +2.8% Y/, reflecting strong base effects from last year's January repricing and the continued weakening in sequential price pressures. They note that benign signals around the January CPI reading have been a significant dovish development for the CNB.
• ING estimate headline inflation at +2.7% Y/Y due to the large base effect from last year, with core seen stagnaring at +3.6%, despite the impact of traditionally high seasonality on the M/M reading (expected at +1.9%).
• Komercni banka expect inflation to print at +2.7% Y/Y, with tax changes and CPI basket re-weighting boosting uncertainty around that forecast. They note that above-2% Y/Y increases in regulated and core prices should be outweighed by lower food and fuel prices.
• Raiffeisenbank dissent from the consensus view in that they expect inflation to stay comfortably above the CNB's target range and come in at +3.8% Y/Y. They point to the expected increase in regulated energy prices, adding that the decline in the prices of some food items has been offset by higher prices of others.