Analysts: food prices drove unexpected January rise in inflation

The January rise in inflation to 2.2 percent that surprised the market mainly stemmed from higher food prices, according to a poll of analysts by ČTK. Year-on-year inflation was 0.5 pp higher than estimated by the Czech National Bank in its forecast.

Economists had expected year-on-year inflation to fall below 2 percent in January, and many expect it to remain near that level in the coming months, as fuel prices will climb with rising oil prices.

The Czech National Bank board at its meeting on February 4 said the risk of deflation and likelihood of using unconventional monetary policy instruments, such as foreign exchange interventions, has decreased.