Czech inflation likely to have remained above 2 pct year-on-year in January

Czech inflation is expected to remain above 2 percent in spite of decline in gas prices. According to a Societe Generale research report, the price level is likely to have risen 0.7 percent sequentially, continuing to reflect the December swing in oil prices in the global market.

Prices of food continued with their quick growth began in November. It is expected to have risen 2 percent in January. But core prices are likely to have been the key driver. Core prices are expected to have risen 0.6 percent sequentially.

“There is a risk that the increase will be even more pronounced, as there may be a lag factor on the reaction to the introduction of electronic sales registration”, said Societe Generale.

Changes in the price list are common during the start of a year; hence there is a good deal of seasonality linked to price rises in January. Administered prices also usually change during the start of the year. A notable reduction in gas prices for consumers is expected. In all, administered prices are expected to have fallen 0.5 percent sequentially.

In year-on-year terms, inflation is expected to have come in at 2.1 percent, added Societe Generale. A solid statistical base effect in prices of food and fuel is pushing inflation print higher during the start of this year. On the contrary, inflation is hampered by a decline in administered prices.