Czech inflation falls to seven-year low: Is the price pinch finally ending?

Inflation in the Czech Republic dropped to 1.8 percent year-on-year in April, marking its lowest level since March 2018 and raising cautious optimism that the country’s prolonged period of rising prices may be nearing its end.

The Czech Statistical Office (CZSO) reported a month-on-month decline of 0.1 percent, further confirming a downward trend from March's 2.7 percent annual rate. A final figure will be released on May 13, though preliminary estimates have proven reliable in recent months.

The steeper-than-expected slowdown surprised some analysts, who had forecast a 2.1 percent increase. "The drop was largely driven by the base effect," said Vít Hradil, economist at Investika. “Food and alcohol prices surged last April, while this year they moved in the opposite direction.”

Energy prices, including fuels, dropped by 6.3 percent in April following a 4.9 percent decline in March. Excluding energy, inflation would have been closer to 3 percent. Food, alcohol, and tobacco prices rose 3.3 percent, down from 5.9 percent the previous month. Meanwhile, goods inflation nearly vanished at 0.2 percent, while services inflation edged up to 4.7 percent.

Despite the headline improvement, economists urged caution. “The result looks better than its structure,” said UniCredit Bank’s chief economist Pavel Sobíšek. “Service prices continue to rise, and the sustainability of low oil prices remains uncertain.”

Core inflation also remains elevated at nearly 3 percent, according to Petr Dufek, chief economist at Banka Creditas. “We shouldn’t overstate a single month’s number. The Czech National Bank’s concerns about underlying inflation trends remain valid.”

The data arrives just ahead of a CNB policy meeting, with markets now expecting a 0.25-point interest rate cut. “The April inflation estimate could tip the balance,” said Citfin’s Miroslav Novák.

Still, economists warn that global uncertainty—particularly over U.S. trade policy—could complicate the inflation outlook. “Rising tariffs on Chinese goods could shift supply and impact prices in Europe,” noted Monika Junicke of the Finance Ministry.

While the inflation dip offers some relief, analysts agree the price pinch may not be over yet.