Consumer prices did not surprised and rose by 0.3% last months. There are three drivers behind: seasonally higher prices of package holidays during the summer season, rising tobacco prices after an increase of excise duties and higher natural gas prices following oil prices with a lag of several months.
Inflation almost reached central bank’s target at 2.0% in July. Monetary-policy inflation measure (excluding impact of tax changes) remains below 1% and can gradually increase to 2% by the end of the year. Inflation is likely to remain at relatively safe level next year as fiscal consolidation will hamper domestic demand. Thus, there is no pressure to change monetary policy immediately. CNB can hold rates stable until 3Q 2011.
Actual (July): 0.3% mom; 1.9% yoy
Consensus: 0.3% mom; 1.9% yoy
Previous (June): 0.0% mom; 1.2% yoy
David Marek, Patria Finance