Inflation returns to a visible decrease in November 2023 in line with the forecast
The CNB comments on the November 2023 inflation figures
According to figures released today, the price level increased by 7.3% year on year in November 2023. Annual inflation declined by 1.2 percentage points compared with the previous month. The year-on-year increase in consumer prices in November was still affected by the statistical effect of the lower comparison base in 2022 Q4. A sharp decline in prices of electricity for households was recorded in October 2022 owing to the statistical capture of the energy savings tariff and the waiver of the renewable sources fee. Adjusted for the effect of last year’s energy savings tariff, inflation would have been 4.7% in November (5.8% in October).
Annual inflation was 0.2 percentage point higher in November than the CNB’s autumn forecast. This was due to a somewhat less pronounced slowdown in the year-on-year growth in administered prices. By contrast, core inflation slowed slightly more markedly than forecasted. The year-on-year decline in fuel prices was also stronger than expected in the autumn forecast. Year-on-year growth in prices of food, beverages and tobacco slowed broadly in line with the prediction.
November 2023
year-on-year in %
MPR Autumn 2023
actual value
CPI
7.1
7.3
Administered prices
29.5
31.7
First-round impacts of changes to indirect taxes
0.1
0.1
Adjusted for changes to indirect taxes
Prices of food, beverages, tobacco
2.6
2.5
Core inflation
4.0
3.9
Fuel prices
-7.5
-10.1
Monetary policy-relevant inflation
7.0
7.2
Core inflation slowed further in November. It has been falling gradually for more than a year now, reflecting a fading of growth in prices of foreign inputs and a cooling of domestic demand. The latter is acting against a further increase in the profit margins of producers, retailers and service providers. Growth in goods prices slowed in particular, while growth in services prices moderated to a lesser extent. Within services, however, imputed rent accelerated slightly following sixteen months of slowdown.
Annual food price inflation slowed significantly further in November. This was due to declining global agricultural commodity prices and domestic agricultural producer prices, as well as subdued consumer demand. The year-on-year decline in fuel prices, which is still being affected by last year’s high comparison base due to Russia’s invasion of Ukraine, deepened further in November.
The observed price developments bear out the expectations of the autumn forecast. Following a temporary increase in October, annual inflation has been slowing visibly again since November. In January 2024, after the effect of the energy savings tariff drops out, annual inflation will decline sharply to the upper boundary of the tolerance band around the 2% target.
The strength and broad nature of the disinflationary trend is illustrated by low month-on-month price growth in recent months, including November. The disinflationary trend is evident mainly (but not solely) in the key segment of consumer prices – the price core, where price growth (core inflation) is now at low single-digit levels in annual terms. The forecast meanwhile assumes an increase in the administered component of energy prices for households (and firms) in January linked with the abolition of government energy distribution subsidies and the reintroduction of fees for renewable sources. The size of the expected increase is in line with the pricing decision published by the Energy Regulatory Office.
Petr Král, Executive Director, Monetary Department
Inflation returns to a visible decrease in November 2023 in line with the forecast
The CNB comments on the November 2023 inflation figures
According to figures released today, the price level increased by 7.3% year on year in November 2023. Annual inflation declined by 1.2 percentage points compared with the previous month. The year-on-year increase in consumer prices in November was still affected by the statistical effect of the lower comparison base in 2022 Q4. A sharp decline in prices of electricity for households was recorded in October 2022 owing to the statistical capture of the energy savings tariff and the waiver of the renewable sources fee. Adjusted for the effect of last year’s energy savings tariff, inflation would have been 4.7% in November (5.8% in October).
Annual inflation was 0.2 percentage point higher in November than the CNB’s autumn forecast. This was due to a somewhat less pronounced slowdown in the year-on-year growth in administered prices. By contrast, core inflation slowed slightly more markedly than forecasted. The year-on-year decline in fuel prices was also stronger than expected in the autumn forecast. Year-on-year growth in prices of food, beverages and tobacco slowed broadly in line with the prediction.
Core inflation slowed further in November. It has been falling gradually for more than a year now, reflecting a fading of growth in prices of foreign inputs and a cooling of domestic demand. The latter is acting against a further increase in the profit margins of producers, retailers and service providers. Growth in goods prices slowed in particular, while growth in services prices moderated to a lesser extent. Within services, however, imputed rent accelerated slightly following sixteen months of slowdown.
Annual food price inflation slowed significantly further in November. This was due to declining global agricultural commodity prices and domestic agricultural producer prices, as well as subdued consumer demand. The year-on-year decline in fuel prices, which is still being affected by last year’s high comparison base due to Russia’s invasion of Ukraine, deepened further in November.
The observed price developments bear out the expectations of the autumn forecast. Following a temporary increase in October, annual inflation has been slowing visibly again since November. In January 2024, after the effect of the energy savings tariff drops out, annual inflation will decline sharply to the upper boundary of the tolerance band around the 2% target.
The strength and broad nature of the disinflationary trend is illustrated by low month-on-month price growth in recent months, including November. The disinflationary trend is evident mainly (but not solely) in the key segment of consumer prices – the price core, where price growth (core inflation) is now at low single-digit levels in annual terms. The forecast meanwhile assumes an increase in the administered component of energy prices for households (and firms) in January linked with the abolition of government energy distribution subsidies and the reintroduction of fees for renewable sources. The size of the expected increase is in line with the pricing decision published by the Energy Regulatory Office.
Petr Král, Executive Director, Monetary Department