Consumer prices decrease in August

Czech consumer prices decreased in August. According to the Czech Statistical Office, the inflation rate decreased by 0.2 percent in monthly comparison, and remained at a record low of 0.6 percent year-on-year. The slowdown was mainly due lower prices of foodstuffs, clothing and fuels. On the other hand, prices of housing and health products have grown. I asked Mr Zahradnik about the outlook for the next period:

"I think also in he inflation performance, we should predict some negative impact of the floods, but also impacts connected with agricultural production which seems to be not very positive this year. However, I think that the inflation performance in the Czech Republic will remain excellent not only in the rest of this year but also in the beginning of next year, even better than inflation performance for example in EMU or in the United States. I think that the inflation performance is without any important domestic risks. I see only one, unrepeated risk, I mean that connected with the floods. There is another, external risk factor, connected with the oil prices, especially in the light of a potential conflict in Iraq. But the domestic Czech risk factors concerning inflation currently practically do not exist. So, I am very optimistic about the future short-term inflation outlook."