Monday, November 10, 2008

Czech Inflation Slows Again In October

Czech inflation dropped back again in October, rather more than had been expected by the central bank and most economists, hitting the lowest level this year, pushed down by transport and food prices. The annual rate fell to 6 percent from 6.6 percent in September. Consumer prices remained unchanged month on month.

The central bank, which anticipated an October rate of 6.4 percent, expects inflation to drop to its mid-point target of 3 percent sometime next year. Czech monetary policy makers only a week ago reduced the key interest rate by three-quarters of a point to 2.75 percent, and this was the largest reduction since 2004, as evidence mounts that both inflation and economic growth are cooling rapidly. On the EU HICP methodology, Czech prices peaked in July, and have since been falling. This process now needs closely watching.

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