Bitcoin price today: gains to $120k, near record high on U.S. regulatory cheer
Investing.com -- Preliminary data revealed that the Czech economy experienced a 0.5% month-on-month increase in price levels for May, pushing year-on-year inflation to 2.4%. This rise comes after an unexpectedly low inflation rate in April, which was attributed to decreased prices of food, alcoholic beverages, and tobacco.
In May, these categories saw a 1.3% monthly price increase, leading to a year-on-year inflation jump from 3.3% to 4.8%.
The Czech National Bank (CNB) views the current inflation rate as within the acceptable tolerance band of 1-3%, despite it exceeding market expectations and forecasts, which were both set at 2.1%.
Inflationary pressures remain particularly strong in the service sector, where year-on-year inflation reached 4.9% in May, a slight increase from April’s 4.7%. This trend is driven by favorable labor market conditions and robust domestic demand.
In contrast, falling fuel prices, influenced by lower oil prices, have provided some relief by acting in the opposite direction. The CNB anticipates that inflation may fluctuate within the upper half of the target’s tolerance band, between 2% and 3%, in the coming months.
Erste Bank (VIE:ERST) has revised its inflation forecast for the year slightly downward from 2.6% to 2.5%, acknowledging the current slightly anti-inflationary impact of global developments on the Czech economy.
The bank expects inflation rates of 2.5%, 2.3%, and 2.2% for the years 2025 through 2027, respectively. They attribute higher inflation primarily to positive labor market developments affecting service prices and, to some extent, food prices.
The next CNB rate cut is anticipated in November, as ongoing inflationary trends in parts of the Czech economy allow the central bank to maintain current rates for several months.
However, risks remain elevated due to significant uncertainty from global macroeconomic developments and the neutral rate value, which the CNB has set at 3%. Some board members may perceive this rate as higher, potentially impacting the CNB’s rate-cutting cycle.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.