“Growth was significantly influenced by the end of the energy-saving tariff for households in the form of an energy allowance. Year-on-year electricity prices increased by 36.4 percent, natural gas by 87 percent, water by 16.3 percent, sewage by 30.3 percent, and heat and hot water by 44.7 percent,” said Pavla Šedivá, head of the Department of Consumer Price Statistics CZSO.
Rising food prices
The year-on-year growth was also influenced by the increase in the price of food and non-alcoholic beverages. For example, the price of rice increased by 35.1 percent, flour by 44.2 percent, pork by 36.8 percent, semi-skimmed long-life milk by 39.5 percent, eggs by 85.0 percent, oils and fats by 31.5 percent, and sugar by 84.7 percent.
The end of the savings tariff also had a significant impact on month-on-month growth. The price of electricity increased by 139.8 percent compared to December. Heat and hot water went up by 23.5 percent, sewage by 30.3 percent and water by 16.3 percent. Natural gas became more expensive “only” by 2.2 percent.
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Of the foodstuffs, the prices of non-alcoholic beverages rose in particular, by 7.6 percent. Fruit prices rose by almost a tenth, and vegetables rose by 7.3 percent. Substantial price increases also occurred for spirits (+9.2 percent), beer (+8.9 percent) and wine (+8.5 percent).
On the contrary, the prices of fuel and oils were lower than in December, which fell by 1.7 percent. Automobiles became cheaper by 1.1 percent. Of the foodstuffs, the prices of butter were lower, by 7.2 percent, and the prices of semi-skimmed milk, by 7.1 percent, the statisticians added.
Overall, the prices of goods rose by 8.7 percent and the prices of services by 1.9 percent.
Analysts expected a significant increase in inflation, precisely because the effect of the energy-saving tariff fell out of the statistics. According to them, the traditional January adjustment of the price lists of goods and services should also have played a role.
Analysts: Single digits in the summer
“While inflation in the closing months of last year was improved by administrative interventions, they ended in January, leading to a jump in prices. In addition, some merchants chose the strategy of selling less with a higher margin, which was reflected in the revaluation at the beginning of the year,” BHS Chief Economist Štěpán Křeček evaluated the January figures.
He further pointed out that higher inflation is prevented by the strong exchange rate of the koruna, which makes imports into the Czech Republic cheaper, thanks to which imported inflation from abroad is dampened. “Inflation can be expected to begin to decline in the coming months and reach a single-digit level during the year. However, it will still reach multiples of the inflation target,” added Křeček.
Also, according to Akcent’s analyst Miroslav Novák, inflation could reach a single-digit level in the summer. He points out, however, that the high inflationary environment in the domestic economy continues to persist.
“It is necessary to take into account that the still very high inflation will have a negative impact on the incomes and consumption of households throughout this year. The Banking Council of the CNB will no longer raise interest rates, but on the other hand, we will probably have to wait until the very end of this year for rates to drop,” said Novák.
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