CPI Actual (Jun): 0.2% mom; 3.5% yoy
Consensus: 0.0% mom; 3.3% yoy
Actual (May): 0.2% mom; 3.2% yoy
Inflation exceeded expectations in June but core inflation still remains negative and enables the central bank to keep relaxed monetary conditions. In coming months, headline CPI is likely to gradually decline. In June, the most significant impact came from food prices (1.4% mom), where seasonality lifted up vegetable prices. Delayed effect of higher excise taxes led to an increase in tobacco prices by 1.4% mom. On the other hand, oil prices declined last three months and led to cheaper gasoline (-2.2% mom) and other oil products.
Sales of clothes and footwear and seasonally higher prices of holiday packages offset each other. While headline inflation keeps above 3%, so-called monetary-policy inflation (without impact of changes in taxes) is at 2.3%, net inflation (without regulated prices) at 1.1% and core inflation (ex foodstuff and fuels) remains negative. Moreover, the core inflation is unlikely to approach central bank’s target until the end of next year. Thus, the CNB can stick to its current relaxed policy setting.