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Czech inflation collapses to its lowest year on year rise in almost three years in January

The Czech economy seems to have won battle with inflation

Consumer price indices (inflation) in Czechia increased by 2.3% year on year and by 1.5% month on month.

It is the lowest year on year growth since March 21. It is also down 4.6 percentage points on December values, while the inflation growth was 17.5% last January.

The development is still below the 3% expectations of the Czech central bank (CNB) and comes a week after CNB cut the interest rates down by 0.50bp to 6.25% in a most dramatic rate change under the current leadership of governor Ales Michl, who took over in the summer of 2022.

Domestic analysts were more cautious, referring to inflation month on month developments, external risks, or developments in food prices.

The slow-down of the growth came mainly from prices in housing, water, electricity, gas and other fuels, where electricity price growth moderated to 13.3% in comparison to a 142.4% year on year increase in December.

In prices of food and non-alcoholic beverages, flour prices dropped by 23.6% year on year, meat by 6.6%, yoghurts by 7.6%, cheese and curd by 9.7% and sugar by 21.9%.

In month on month terms, electricity prices were higher by 12.1%, water supply by 10.9%, natural gas by 3.6%, sewage collection by 13.4%, heat and hot water by 3.2%, and actual rentals by 0.9%. Non-alcoholic beverage prices increased by 3.9%, fruit by 5% and vegetables by 2.4%.