Czech inflation level likely to have accelerated in November on rise in food prices

Czech inflation level is expected to have accelerated in November because of growth in food price. Price levels are likely to continue rising in the Czech Republic. Food is the main growth driver of inflation and was also the main driver of price dynamics in the euro area. Growth was also seen in food prices in the German border regions. Food price in Bavaria rose 0.7 percent sequentially, and it jumped 1.2 percent in Saxony.

“Our estimate for the Czech Republic indicates a food price increase of 1.6 percent”, said Societe Generale in a research report.

Meanwhile, there are just minor rise in fuel prices as the global oil price stayed virtually unchanged on average in November. Core prices are expected to have registered a seasonal decline. But the drop would be not big enough to drag the overall price growth into the negative. Thus prices are likely to have grown 0.2 percent in November. Overall inflation is expected to have come in at 1.4 percent. The pace of inflation is likely to further accelerate at the turn of the year.

“We expect the inflation target to be hit as early as the first few months of 2017, which would allow the central bank to remove the FX floor in the second quarter of next year”, added Societe Generale.