High inflation causing price-rise woes
According to figures released on Monday, inflation was running at 7.5 percent in the Czech Republic in February – as it had been the previous month. Many Czechs are concerned about spiralling prices of everyday goods and services – and the government has even increased the old-age pension to offer some relief to the elderly. Why is inflation so high? And how long can it remain at current levels?
“There are many, many factors, and the most important one is the increase in water and heating. Besides that, we also saw an increase in oil prices, food – for example bread, which has gone up by 4 percent month on month. When we look at the prices on a year-on-year basis, we see a very significant increase of energy, of food, of oil and also housing. When we have a look at the regulated rents, we see that they went up by 29 percent, so that’s a huge jump for people who live in regulated flats.”
“We expect the Czech prices, or inflation figures have reached their highest level at this time. We are now at about 7.5 percent and over the next couple of months they will go slightly down from that. We expect the average inflation in this year to be around 6.7 percent and at the beginning of the next year, it will dip significantly as the effects of the recent government measures [such as VAT increases] will vanish. Therefore, we expect to return to levels around 3 percent, which is quite acceptable and quite common in the countries around us. But the current inflation is extraordinarily high, not only compared with previous trends in the Czech Republic, but also in the Euro-zone.”
Most analysts predict that inflation levels in the Czech Republic will indeed return to normal levels by the end of the year – but with many economic woes predicted to be connected to climate change and increasing demands for limited non-renewable energy supplies, a long-term solution to rising prices may prove far more elusive.