Czech, Romanian inflation ticks up in July
PRAGUE, Aug 12 (Reuters) - Czech and Romanian inflation ticked up above expectations in July, data showed on Monday, with the Czech statistics building on a hawkish message from the central bank, which has already slowed its rate easing pace this month.
Czech consumer prices CZCPI=RR rose by 0.7% on a monthly basis in July, putting year-on-year inflation at 2.2%, an acceleration from 2.0% in the previous month that defied market expectations for stable price growth.
The year-on-year CPI rate was above the bank's August quarterly economic forecast of 2.0%, the bank's target.
The main driver in July was the price of holidays.
Goods prices rose 0.6% year-on-year, while services prices were 4.9% higher, confirming services as being at the centre of inflation risks.
The bank signalled after its Aug. 1 meeting, where it slowed the pace of policy easing to 25 basis points, that it would be very careful in any further interest rate cuts form the current 4.65% to keep inflation safely on target.
Governor Ales Michl said he would welcome some target undershooting, and the new forecast assumed no further cuts until the end of this year.
"The crown welcomed the slight inflation increase by firming below 25.20, because ... it raise the probability that the CNB will indeed be very cautious in further interest rate easing," Petr Dufek, chief economist of Banka Creditas said in a note.
In Romania, consumer price inflation ROCPI=ECI rose to 5.42% on the year in July from 4.94% in the previous month, slightly above expectations, data from the National Statistics Board showed.
Romania's central bank lowered its annual inflation forecasts for this year and 2025 on Friday.
Governor Mugur Isarescu said policy decisions would remain data-dependent, adding he did not believe the bank would be able to cut interest rates further in the fall in the event of a negative scenario such as a reversal in capital inflows.
Analysts polled by Reuters expect one more quarter point interest rate cut to 6.25% before year-end.
Reporting by Jan Lopatka; Editing by Sharon Singleton
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
