(Bloomberg) -- Inflation in the Czech Republic accelerated last month, adding to arguments for policymakers to consider halting interest-rate cuts.
Consumer prices rose 2.8% from a year earlier, compared with 2.6% in September, the Czech Statistics Office said on Monday. The reading matched the 2.8% median estimate in a Bloomberg survey of analysts and the central bank’s own forecast for the month.
While the central European country is grappling with sluggish economic growth, officials have pointed to rising costs for services and a rebounding housing market as reasons for cautious easing steps. The central bank expects inflation to remain elevated in the next few months, due to an increase in volatile food prices and temporary effects.
Core inflation was 2.4% in October, the same as forecast, the Czech National Bank said in a separate statement on Monday. The measure of underlying domestic price trends was driven mainly by domestic wage growth and the rising prices of services, while an earlier protracted drop in household demand continued to pull core inflation down, according to the monetary authority.
“This is fostering a decrease in the profit mark-ups of producers, retailers and service providers over their costs, which is partly offsetting the effect of rising wages on services prices,” the bank said on its website.
Policymakers have slashed the main interest rate by a cumulative 3 percentage points to 4% over the past year, delivering the eighth consecutive cut last week. Still, Governor Ales Michl said after the Nov. 7 meeting that the board was already discussing when to halt the easing cycle.
Michl also said that he would prefer for core inflation to be “slightly below” the 2% target, compared with the central bank’s projections that assume the measure will hover slightly above the goal in the coming quarters.
(Updates with core inflation, central bank comment from fourth paragraph.)
©2024 Bloomberg L.P.