Inflation dips to lowest level since 2018: What's cheaper in Czechia?

Following a high base in 2023, the government and Czech National Bank have finally managed to quell the nation's soaring inflation.

Thomas Smith

Written by Thomas Smith Published on 12.03.2024 11:02:00 (updated on 12.03.2024) Reading time: 2 minutes

Year-on-year inflation in the Czech Republic slowed to 2 percent in February – within the target of the Czech National Bank and the lowest level since December 2018. However, although food prices generally declined, utilities such as electricity and heat rose year on year.

Food cheaper, but services pricier

New data from the Czech Statistical Office (CZSO) shows that foods such as vegetables, eggs, milk, flour, sugar, and poultry all became cheaper. The price growth of alcoholic beverages dropped: beer, for example, rose in price by 2.8 percent (down from 4 percent growth in January). 

What's got cheaper

  • Eggs: 30.7 percent
  • Semi-skimmed milk: 23.4 percent
  • Flour: 22.8 percent
  • Sugar: 21.1 percent
  • Poultry: 16.4 percent

    Year-on-year price declines, February 2024

However, apartment rents rose by almost 7 percent, and water, electricity, and heating also all jumped in price compared with February 2023. Goods and services also went up in price year on year, as did catering and accommodation services. 

A huge decline – one of EU's lowest inflation rates

According to the CNB’s forecast, inflation should hover around the 2 percent target for the entire year – the goal set by the national bank last year. In contrast, inflation in February 2023 stood at a huge 16.7 percent. Average inflation in 2023 was 10.7 percent. 

On a Europe-wide level, Czechia currently has the eighth-lowest inflation rate out of 41 monitored countries. According to Eurostat, which uses slightly different variables compared with the CZSO, annual inflation in Czechia stood at 2.2 percent in February 2024 – below the eurozone average of 2.6 percent. 

Is it all good news?

Analysts, however, are weary of the fact that services-price growth is still growing at worryingly high levels. "Overall inflation has returned to a reasonably low level. However, core inflation remains slightly elevated. It is necessary to monitor prices in the area of ​​services more closely, where the effects of inflation burn out more slowly," warns Deloitte's chief economist, advisor to President Petr Pavel, and member of the Government's National Economic Council David Marek in an interview with Czech Television (ČT).

Chairman of the TOP 09 parliamentary club Jan Jakob said in ČT that the effects of the government’s 2023 consolidation package – and the resultant reduction on value-added tax on food – helped keep price levels down.

On the other hand, deputy chairman of the opposition ANO parliamentary club Patrik Nacher drew attention to the comparatively high base from 2023 and pointed out that retail sales have been falling for 16 months in a row – a sign of overbearing inflation.

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