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Inflation in the Czech Republic is growing the fastest in almost 25 years. It is driven up by expensive energy, fuel, but also food. According to statistics, it rose to 12.7 percent year on year in March from 11 percent in February. The main reasons are the war in Ukraine and sanctions against Russia. In February, the Czechia had the third highest inflation in the EU. The March figures are not yet, but according to economists, the increase in prices, which will continue even further, will affect the standard of living of each of us.
The black scenarios have materialized and inflation is even worse than expected due to the war in Ukraine.
“Until relatively recently, when it was said that inflation could be 10 percent, many were holding their heads, which is terrifying. And now we are looking at inflation at the level of 16 to 20 percent,” said economist Lukáš Kovanda.
“It should be noted that the price of the basic, necessary commodities that everyone needs, ie food, energy, fuel and housing, is increasing for most Czech households,” added economist Petr Studnička.
Fuel prices rose the most year-on-year, by more than 50 percent. While last March the average price of fuels was around 29.60 crowns per liter, this year in March it was more than 16 crowns higher. But electricity and gas are also rising in price, and this is reflected everywhere. And so the prices of common foods, such as butter, milk, potatoes or flour, are rising.
“By default, we bought flour for a year, for example, 6.80 crowns. And now during the war, and when it is known that Ukraine probably will not sow and supply wheat, we buy a kilo of flour for 14 crowns,” said bakery owner Richard Kabát.
The rise in the price of wheat will thus be reflected in particular in rising bread prices. “For example, we have currently increased the price of bread from 46 crowns to 54 crowns,” Kabát added.
The average price per kilo of consumable cumin bread in the Czech Republic was 29.60 crowns last October, now it costs almost 35 crowns. It’s the same with butter. Its average price for half a year increased from 37.60 to 44.70 crowns.
“This is really a thing when the economic problem also becomes a social problem, because food is a key item of expenditure even for very poor households, retired households, single mothers,” Kovanda continued.
According to experts, the development of inflation will depend on the development of the war in Ukraine. If Russian gas supplies to the European Union are interrupted, we can expect inflation of as much as 20 percent. High inflation, meanwhile, is undermining people’s savings in banks.
Inflation continues to rise rapidly, being the third highest in the Czech Republic
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“If the inflation is 20 percent, which is likely now, then the 100 thousand will shrink to 80 thousand in that year, which means you will not spend a penny, but you have 20 thousand crowns less,” Kovanda explained.
According to experts, investing in gold, silver or real estate funds can be an effective protection against inflation.
drz, TN.cz
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