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The Czech National Bank (ČNB) should keep its interest rates at a higher level than normal in order to prevent what is currently a predominantly cost-push inflation turning into a demand-pull inflation, ČNB board member and future governor Aleš Michl has told the weekly Ekonom. Cost push inflation is a phenomenon largely independent of external control, he said.

According to Mr Michl it is necessary to support government efforts to lower public debt and not to increase wages above labour productivity growth levels.

In the future, the yield from the ČNB's foreign exchange reserves could finance the deficit of the pension system, the upcoming bank governor said.

Mr Michl is set to replace current Czech National Bank Governor Jiří Rusnok from July of this year.

The government on Wednesday approved another hike in old age and disability pensions to make up for the high inflation. Pensions will go up by an average 700 crowns a month as of September in what will be the third increase this year. The average old age pension will thus increase from roughly 15,000 to 16 thousand crowns a month. The government is bound by law to increase pensions whenever inflation crosses the 5 percent mark. The inflation rate is now at 14.2 percent.

Trade union leaders and government representatives on Wednesday failed to reach agreement on wage growth in the public sector in the second half of 2022. The unions are demanding a hike that will make up for the soaring inflation, which has now reached 14.2 percent and an increase in the minimum wage to 18,200 crowns from July. Another meeting is scheduled for June 7. The unions are threatening a general strike if there is no agreement by that date. The average salary in the public sector is 44,782 crowns a month, but two thirds of employees are well under that mark.

The Association of Czech Beer Brewers has announced another significant hike in the price of beer. According to the president of the association, Michal Voldřich, the higher costs of energy and raw materials such as malt and hops, will send up the price of beer by an average 10 percent as of June. Most breweries increased their prices in the spring and further increases can reportedly be expected at the end of the summer, when many breweries will see their contracts with energy suppliers expire, forcing them to accept less favourable tariffs.