Czechia continues to outperform many European economies on inflation. In September 2026, annual inflation reached 2.2%, the fourth-lowest rate in the EU, compared with 3.3% in Germany, 3.6% in Austria and 4.0% in Poland. Both the EU and euro area averaged 3.8%. Meanwhile, Czech wages increased by 6.4% year-on-year in the second quarter, strengthening household purchasing power.

The labour market remains exceptionally tight. According to Eurostat, unemployment stood at just 2.8% in September, the lowest in the EU, compared with the European average of 6.2%. However, labour shortages are pushing employment costs higher. Czech hourly labour costs increased by 5.6% in the second quarter, against 3.2% across the EU.

Corporate profitability is already under pressure. Labour costs at Czech non-financial companies rose by 6.7% year-on-year, while their profit rate declined to 42.4%, down 1.8 percentage points.

External challenges add further uncertainty. Euro-area industrial production fell by 0.5% in August, potentially weakening demand for Czech exports. The European Commission's 2026 Country Report also highlights slowing productivity growth and persistently high energy costs.

According to Michal Španěl of JenPráce.cz, improving productivity will be essential. Investment in automation, digitalisation and workforce development could help businesses remain competitive.

Czechia's favourable economic position provides a strong foundation, but long-term competitiveness will depend on companies generating greater added value.

Sources: Strojirenstvi.cz, Eurostat