Falling food prices push Czechia's inflation below 9 percent: Which products are cheaper?

In July, consumer price growth in Czechia fell to below 9 percent for the first time since December 2021, driven largely by decelerating food prices. But which foodstuffs have seen the biggest changes?

Head of consumer price statistics at the Czech Statistical Office, Pavla Šedivá, emphasized that the changing of food prices has been a central driver of the broader inflationary pattern. Šedivá notes that decelerating food prices help temper inflation.

On a month-on-month basis, semi-skimmed milk has become about 5 percent cheaper, fruit has declined in price by 4.3 percent, eggs by 3.3 percent, cheese by around 3 percent, and vegetables by almost 2 percent. 

Year-on-year data, however, paints a different – bleaker – picture. Compared to July 2022, sugar is up by around 45 percent and fruit by 10 percent. One positive aspect, however, is that these food items have decelerated in price since June this year, when sugar had registered over 50 percent inflation and fruit 15 percent.

However, it is also important to note that the broader deceleration in inflation may stem from the high comparative base of the previous year, rather than indicative of a widespread shift in pricing dynamics.

Petr Dufek, Chief Economist of Banka Creditas, highlighted the nuanced nature of this transition, indicating that while some products experienced significant price fluctuations due to global market factors, others showcased a slowdown in their growth rates.

President of the Food Chamber of the Czech Republic Dana Večeřová hopes that food prices will continue to fall in the coming months. "I firmly hope that the reduction in prices will continue, even if the costs [of Czech farmers] will hardly return to the level before the war in Ukraine," she said. Večeřová also said that, with falling energy and production costs, food prices too would subsequently become cheaper.

However, the price of pork in Czechia is anticipated to persistently rise due to it being tied to the German stock exchange, where daily increments contribute to its escalation. The shortage of pork in Europe, which also pushes up prices, is compounded by farm closures and reduced operations post-Covid-19. The Czech Association of Meat Processors revealed that pork prices are at an all-time high, coupled with declining breeding numbers and increased costs, leading to an ongoing supply-demand imbalance.

Moving forward, economists anticipate that, while the moderation in inflation will persist over the coming months, the rate of the decrease might not be as rapid as previously observed.