Inflation increases in October 2024 but remains within the tolerance band around the CNB’s 2% target
The CNB comments on the October 2024 inflation figures
According to figures released today, the price level increased by 2.8% year on year in October 2024. Annual consumer price inflation accelerated by 0.2 percentage point compared to the previous month but remained within the tolerance band around the CNB’s 2% target.
Annual inflation in October was in line with the CNB’s autumn forecast overall. Even within the structure of the consumer basket, deviations from the forecast were not significant. Slightly faster growth in administered prices was offset by somewhat weaker growth in prices of food, beverages and tobacco and a slightly larger decrease in fuel prices. Core inflation was in line with the forecast.
October 2024
year-on-year in %
MPR Autumn 2024
actual value
CPI
2.8
2.8
Administered prices
7.7
8.1
First-round impacts of changes to indirect taxes
0.1
0.1
Adjusted for changes to indirect taxes
Prices of food, beverages, tobacco
2.5
2.3
Core inflation
2.4
2.4
Fuel prices
-11.4
-11.5
Monetary policy-relevant inflation
2.7
2.7
Core inflation is being driven by wage growth in the domestic economy, which is affecting services prices in particular. Conversely, the previous protracted decline in domestic demand, due in part to the CNB’s tight monetary policy, is dampening core inflation. This is fostering a decrease in the profit mark-ups of producers, retailers and service providers over their costs, which is partly offsetting the effect of rising wages on services prices. Goods prices within core inflation are virtually flat year on year. The ongoing recovery in the property market is being reflected in accelerating growth in imputed rent.
Growth in prices of electricity, heating, and water supply and sewerage charges made a significant contribution to annual inflation in October. Prices of tobacco and alcoholic beverages also increased. Prices of food and non-alcoholic beverages were broadly flat year on year. By contrast, inflation was dampened by a continued decline in fuel prices as a result of the previous decrease in oil prices on global markets.
The price level increased by 0.3% in October compared to the previous month. According to the CNB’s autumn forecast, inflation will temporarily rise slightly above the upper boundary of the tolerance band at the end of this year. This will be due partly to the statistical effect of the low comparison base in December 2023, when retailers incorporated the decrease in VAT on food into prices in advance. A gradual pass-through of the higher prices of some food commodities into retail prices will act in the same direction. The increase in the price level will slow next year, gradually returning to the central bank’s 2% target, as administered price inflation will slow markedly from January onwards. Fuel prices will continue to decline year on year in 2025. Core inflation will remain slightly above 2% in the quarters ahead. Its expected developments will reflect not only fading cost pressures, but also subdued demand in the Czech economy.
Petr Král, Executive Director, Monetary Department
Inflation increases in October 2024 but remains within the tolerance band around the CNB’s 2% target
The CNB comments on the October 2024 inflation figures
According to figures released today, the price level increased by 2.8% year on year in October 2024. Annual consumer price inflation accelerated by 0.2 percentage point compared to the previous month but remained within the tolerance band around the CNB’s 2% target.
Annual inflation in October was in line with the CNB’s autumn forecast overall. Even within the structure of the consumer basket, deviations from the forecast were not significant. Slightly faster growth in administered prices was offset by somewhat weaker growth in prices of food, beverages and tobacco and a slightly larger decrease in fuel prices. Core inflation was in line with the forecast.
Core inflation is being driven by wage growth in the domestic economy, which is affecting services prices in particular. Conversely, the previous protracted decline in domestic demand, due in part to the CNB’s tight monetary policy, is dampening core inflation. This is fostering a decrease in the profit mark-ups of producers, retailers and service providers over their costs, which is partly offsetting the effect of rising wages on services prices. Goods prices within core inflation are virtually flat year on year. The ongoing recovery in the property market is being reflected in accelerating growth in imputed rent.
Growth in prices of electricity, heating, and water supply and sewerage charges made a significant contribution to annual inflation in October. Prices of tobacco and alcoholic beverages also increased. Prices of food and non-alcoholic beverages were broadly flat year on year. By contrast, inflation was dampened by a continued decline in fuel prices as a result of the previous decrease in oil prices on global markets.
The price level increased by 0.3% in October compared to the previous month. According to the CNB’s autumn forecast, inflation will temporarily rise slightly above the upper boundary of the tolerance band at the end of this year. This will be due partly to the statistical effect of the low comparison base in December 2023, when retailers incorporated the decrease in VAT on food into prices in advance. A gradual pass-through of the higher prices of some food commodities into retail prices will act in the same direction. The increase in the price level will slow next year, gradually returning to the central bank’s 2% target, as administered price inflation will slow markedly from January onwards. Fuel prices will continue to decline year on year in 2025. Core inflation will remain slightly above 2% in the quarters ahead. Its expected developments will reflect not only fading cost pressures, but also subdued demand in the Czech economy.
Petr Král, Executive Director, Monetary Department