Czech inflation surges to 2.2% in July

Czech inflation unexpectedly accelerated to 2.2 per cent in July, up from 2 per cent in June, according to the statistics office.

The increase surpasses both the Czech National Bank’s forecast and the median estimate in a Bloomberg survey, which both anticipated a 2 per cent rise.

The central bank, which recently cut its benchmark rate by 0.25 percentage points after four consecutive half-point reductions, is now faced with balancing a sluggish economic recovery against rising service costs and a rebound in the housing market. Policymakers are wary of inflation risks and a weakening koruna.

Core inflation, reflecting underlying domestic pressures, will be reported later today. Governor Ales Michl has emphasised the need for continued tight monetary policy until core inflation is fully controlled.

Attribution: Bloomberg