Covid has had and likely will have a devastating short-term impact on the Czech tourism industry. The tourist sector depends on foreign guests for a large share of its income. This is particularly true of Prague. The domestic tourism market should revive this summer, although decreased family incomes– or fears of decreased incomes– may result in less spending and shorter stays through the winter ski season.

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.