Consumer prices slightly decreased again as seasonally lower food prices outweighed rising fuel prices. Headline inflation mildly increased and remains above the 3% threshold. However, core inflation is still below zero. In August, food prices declined by 1.0% as seasonality dragged down vegetable prices by 9% and food prices by 3.1%. Prices of some other items, like dairy products, pastry or eggs, also slightly decreased.
On the other hand fuel prices rose more than 3% during the August. Crude oil prices are the main reason to blame. Average price of a barrel of Brent was 95.9 USD in June, 102.7 USD in July and climbed to 112.4 USD in August. Decomposition of headline inflation reveals that changes of VAT and tobacco excise tax contributed 1 percentage point, an increase of regulated prices added 1.5 percentage point. Prices of food and energy put up another 0.9 percentage point.
Thus, it is obvious that core inflation is still slightly negative. In theory, deflation and widening output gap should persuade the central bank to ease monetary conditions, but rates of the Czech National Bank are already close to zero (however the Danish central bank shows that even zero can be surpassed).
CPI (Aug): -0.1% mom; 3.3% yoy
Consensus: 0.0% mom; 3.4% yoy
Previous (Jul): -0.1% mom; 3.1% yoy