Economic policy / Macroeconomic Indicators, Economic Growth
This section reports on economic policy initiatives of the Czech government, the EU, and other entities that have a direct impact on the competitiveness of the country. It also includes information on economic priorities of the AmCham and other leading associations.
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Spotlight issue
Consumer price inflation accelerates as core inflation breaks records
In June, consumer prices increased 0.6% mom and 3.3% yoy. Czech inflation thus accelerated significantly. This was due to higher prices of alcoholic beverages and tobacco, where the delayed effect of higher excise tax on cigarettes continued. However, core inflation also increased significantly, rising to 3.5% yoy from the previous 3.3%. According to the CNB, this value represents the inflationary risk of its current forecast. In our opinion, however, current high inflation is only a temporary matter and we expect it to decrease in the second half of this year.
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Profit margins decline, households increase savings
As a result of the coronavirus pandemic, the Czech economy contracted 3.4% qoq in the first quarter, i.e. one-tenth more than originally expected. In a year-on-year comparison, the result did not change and the economy fell 2%. Fixed investment followed by household consumption contributed most to the qoq decline. The quarter-on-quarter decline in the dynamic was only partially offset by higher government consumption and higher net exports.
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