Consumer prices in the Czech Republic in 2021 see greatest jump in over a decade

The year-on-year increase was much higher than analysts had expected; for which goods and services can we expect to pay more?

Raymond Johnston

Written by Raymond Johnston
Published on 13.09.2021 14:00 (updated on 13.09.2021)

Consumer prices in the Czech Republic in August rose 4.1 percent compared to last year, the highest year-on-year jump in inflation since November 2008, according to the Czech Statistical Office (ČSÚ). Higher prices were seen in almost all categories of the standard consumer basket, though housing contributed the most.

The level of increase surprised economists, who had expected a rise of 3.4 percent, while the Czech National Bank (ČNB) has forecast 3.1 percent.

“Consumer prices in August increased by 0.7 percent compared with July [2021] and accelerated its year-on-year growth to 4.1 percent, which is the highest since November 2008,” Pavla Šedivá, head of ČSÚ’s consumer price statistics unit, said.

“This development came both from prices of goods and services in almost all consumer basket divisions. Prices of goods increased by 3.6 percent and services almost by 5 percent compared with last August,” Šedivá added.

The year-on-year growth came mainly from higher prices in the categories “housing, water, electricity, gas, and other fuels” and in “food and non-alcoholic beverages.”

Prices for materials and services for dwelling maintenance and repair increased by 6.7 percent. The prices of actual rentals increased by 2.5 percent compared to last year. Water supply and sewage collection both rose by 5.5 percent. Electricity prices decreased by 3.4 percent and natural gas by 4.7 percent.

In food and non-alcoholic beverages, butter prices increased 12.4 percent and eggs by 5.8 percent. Prices of oils and fats increased by 13.2 percent year-on-year. Vegetable prices rose by 7.0 percent, but fruit prices were lower by 2.2 percent year-on-year. In the clothing and footwear category, garment prices rose 8.2 percent, and shoes and other footwear were up 8.6 percent.

In the transport category, prices of fuels and lubricants for personal transport equipment increased by 19.0 percent.

Next in the order of influence were prices in the alcoholic beverages and tobacco category, where prices of beer were higher by 6.3 percent and tobacco products by 9.9 percent.

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Growth of the overall price level came also from the restaurants and hotels category, where prices of catering services were higher by 5.2 percent.

Prices of goods in total and services went up 3.6 percent and 4.9 percent, respectively.

Experts expect inflation to slow down for the rest of the year.

“In our forecast so far, we anticipate that the pace of price increases will weaken for the rest of the year, with annual inflation reaching 4 percent at the end of the year,” Michal Brožka, senior economist at Komerční banka, said in a statement.

He added that is was unclear how much of the price rises were temporary, and related to issues like delayed deliveries that have been affected by the pandemic.

Compared to the previous month, the housing, water, electricity, gas and other fuels category saw August prices of materials and services for dwelling maintenance and repair increase by 1.2 percent. In recreation and culture, prices of package vacvations were higher by 3.3 percent. Price development in'transport was again influenced by price rise of fuels and lubricants for personal transport equipment by 0.9 percent and motor cars by 0.5 percent.

Price increases were also seen in restaurants and hotels, where prices of catering services went up by 0.9 percent, of which prices in restaurants and cafés rose by 1.1 percent. In food and non-alcoholic beverages, butter prices were higher by 8.5 percent, eggs by 7.5 percent, fruit by 1.6 percent, and poultry by 1.8 percent.

Vegetable prices decreased by 3.3 percent month-on-month, with potatoes dropping by 5.8 percent. Pork prices were lower by 1.7 percent and sugar by 5.4 percent.

Prices of goods in total went up by 0.5 percent and prices of services by 1.2 percent.

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