Czech consumer prices rose by 2.5% year-on-year (y/y) and by 0.5% month-on-month in April, the Czech Statistical Office (CZSO) reported, confirming its preliminary estimate released earlier this month.

Inflation accelerated on the 1.9% y/y registered in March and reached its highest in half a year. Inflation could accelerate further in the coming months as the impact from the conflict in the Middle East is expected to fully hit consumer prices.

“Consumer price development in April was again significantly influenced by prices of fuels and lubricants,” commented Pavla Šedivá of CZSO, while prices of food and non-alcoholic offset the impact to some extent with 1.3% y/y growth.

“Diesel was sold for CZK44.5 (€1.8) per litre and petrol Natural 95 for CZK41.1 per litre, on average. These were the highest values since October and November 2022, respectively,” Šedivá pointed out.

Consumer prices in the transport basket rose by 8.7% y/y, with prices of fuels and lubricants accelerating to nearly 25%, following 13% growth in March.

In the alcoholic beverages and tobacco basket prices of spirits and liquors were up by 5.8%, as was wine, while beer prices rose by 2.7% and tobacco products by 5.6%. In housing, water, electricity, gas and other fuels, prices of actual rentals rose by 6.3%, water supply by 3.9%, sewage by 3.8% and heat and hot water 1.9%, while prices of electricity fell by 11.6% and natural gas by 5.6%. Prices of goods in April in total rose by 1.1% and prices of services by 4.8%.

"Although the oil prices continued to grow, their direct effect on the overall inflation is likely to weaken unless there is another escalation in the Middle East,” analyst Jan Slabý of Ecovis consultancy was quoted as saying by the Czech Press Agency (CTK), adding that, “nevertheless, prices of fuel will gradually get reflected in the prices of goods and services, including food, which have been lowering the overall inflation.” 

Although inflation is expected to grow further in the second half of the year, the overall level for this year could stay at around 2.5%, analysts surveyed by CTK noted.

As IntelliNews reported, local regulator Czech National Bank (CNB) kept the main interest rate at 3.5% at its monetary board meeting last week and is expected to remain vigilant regarding monetary policy decisions later this year.

“The Bank Board made its decision today amid exceptional uncertainty stemming from the conflict in the Middle East,” CNB stated, adding that “it discussed various scenarios outlining the impacts on both inflation and real economic activity,” and “concluded that, given the expected developments, monetary policy needs to be kept relatively tight”.