Inflation in CzechRep slows down to 0.7% in Jan

The drop in the price level was influenced the most by housing prices. In contrast, fuel prices increased. Month-on-month, prices rose by 1.2 percent.

A large part of the month-on-month growth was due to a hike in indirect prices and regulated prices.

"Inflation is kept low by weak domestic demand. The economy lacks inflationary pressures. Were it not for the increase in indirect taxes, prices would rise only by 0.2 percent in January, which would be perhaps the lowest month-on-month growth in January inflation," said Raiffeisenbank analyst Helena Horska.

"Besides, the remaining 0.2 percent are changes in regulated prices, above all rents. Were it not for these external administrative changes, prices would stay at around the December level," Horska said.

The growth in net rents slowed down to less than 12 percent in January from almost 20 percent in December as there was a sharp hike in rents in January last year. The growth in prices of water supplies and sewage collection slowed down for the same reason.

On the other hand, the January price growth was affected the most by fuel prices which rose by 28.1 percent.

In the category of alcoholic drinks and tobacco, prices of alcoholic drinks increased by 4.4 percent. Prices of catering and accommodation services both added 2.4 percent.

In the category of other goods and services, prices of social services grew by 6 percent and insurance prices went up by 1.1 percent, statisticians said.

Prices of many foodstuffs remained lower year-on-year, and prices of clothing dropped by 4.2 percent.

In the category of housing, natural gas prices fell by 12.3 percent and electricity prices by 2.7 percent. In the category of recreation and culture, prices of audiovisual and photographic equipment and data processing equipment continued to drop (-7.3 percent).

Mobile phone prices decreased by 11.3 percent, and telephone and telefax prices fell by 2.3 percent owing to discounts provided by mobile operators, the CSU said.

Prices of goods in total dropped by 0.5 percent, while prices of services were 2.3 percent higher. The overall consumer price index excluding imputed rents was 100.4 percent year-on-year.

The month-on-month consumer price increase was influenced by a rise in basic and reduced VAT rate and a growth in excise tax on fuel and alcoholic drinks.

The impact of this change on the overall increase of the month-on-month consumer price index in January amounted to a 1 percentage point growth, according to the CSU's approximate calculation.

In housing, net rents went up by 7.8 percent, of which regulated rents by 14.1 percent and market rents by 0.2 percent. Prices of heat and hot water were 2.3 percent higher, water supply prices were 3.8 percent up and sewerage collection prices added 4.4 percent.

The price rise in the category of food and non-alcoholic drinks was due mainly to a seasonal increase in prices of vegetables by 17.0 percent and a moderate price rise in most foodstuffs.

The price rise in the category of alcoholic drinks and tobacco, mainly prices of spirits, wine and beer increased due to higher excise tax and VAT.

Similarly, the rise in prices in transport was influenced by higher prices of fuel by 7.0 percent. Prices of transport services were 1.1 percent higher.

In the category of restaurants and hotels, prices of meals increased by 0.9 percent, beer prices by 3.0 percent and prices in canteens by 3.1 percent. In health, amounts paid by patients for medicines were 4.5 percent up.

Prices fell also owing to discounts offered in winter sales which reduced clothing and footwear prices by 3.6 percent and 3.4 percent, respectively.

In the category of housing, prices of electricity dropped by 2.5 percent and natural gas prices dipped by 0.6 percent. In transport, prices of cars were 4.7 percent lower.

Prices of goods in total increased by 0.8 percent and prices of services by 1.8 percent.

The average inflation rate, that is the increase in the average consumer price index in the 12 months to January 2010 compared with the average CPI in the previous 12 months, stood at 0.9 percent in January, which is 0.1 percentage point down compared with December 2009.

According to preliminary data of Eurostat, the year-on-year increase in the average harmonized index of consumer prices (HICP) in the EU-27 member states was 1.4 percent in December 2009, a growth of 0.4 percentage point against November.

Author: ČTK
www.ctk.cz