Consumer prices up 2.6% y/y in June, driven by fuel, electricity and rent

Consumer prices in June rose 2.6% year on year, driven by higher costs for fuel, electricity, and household rent, the Czech Statistical Office said on Wednesday. Prices for telecommunications, clothing and heating fell in annual terms. Inflation has accelerated for a third consecutive month, following a growth rate of 2.2% y/y in May.

Some analysts predict the Czech National Bank will again intervene to stem inflation by increasing key interest rates. On 27 June, the central bank raised rates for a fourth time in just under a year, setting the two-week repo rate a 1% from 0.75%.

The country’s economy continues to accelerate and record-low unemployment is pushing up wages. Another unexpectedly strong inflationary factor has been the weakening of the crown against major world currencies. The crown is now at its lowest level against the euro in nearly a year, at CZK 25.9/EUR.