The consumer price index declined in November by 0.3%

According to our estimates, the consumer price index declined in November by 0.3%. The downward trend in prices was led by food and fuels. In the food category, there were declines in the prices of port, poultry, milk, eggs, flour, bakery goods, pasta and fruit. Fuels declined in November by another 3% in the case of gasoline and by 2% in the case of diesel. It now seems as though inflation could remain under the level of 2% not just until the end of this year, but also for the whole 1Q07. Inflation lower than the Czech National Bank's forecast is a likely reason to see a postponement of an expected interest rates hike. The second important factor is the strengthening of the koruna.