Czech headline inflation likely to slowdown in January

Czech headline inflation is expected to continue to decelerate in January, noted Erste Research Group. The slowdown would mainly be because of the base effect, as the considerable rise in the price level from January 2017 would wane from the year-on-year print.

Furthermore, a correction in prices of many significant food items is expected as their increase last year was partially driven by supply-side factors. Therefore, headline inflation is expected to surpass the target just slightly at the start of the year.

“However, solid domestic demand and high wage growth (approx. 8 percent in nominal terms in 2018) will gradually spill over into inflation, with its peak in 3Q18 around 2.5 percent”, added Erste Research Group.

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