Inflation slowed to 2.7 percent in February
Economic commentary by Jaromir Šindel, Chief Economist of the CBA
According to the preliminary estimate of the CZSO, consumer price inflation slowed slightly to 2.7% year-on-year in February 2025 from 2.8% in January, which was in line with analysts' expectations (2.7%). The slowdown in annual growth mainly reflects a moderate year-on-year increase in food, alcohol and tobacco prices and a slightly larger decline in energy and fuel prices.
On a month-on-month basis, prices rose by 0.2%, mainly reflecting the rise in services prices, while the month-on-month decline in food prices and the slight fall in energy and fuel prices moderated the impact on headline inflation.
Barring a major surprise in non-energy administered prices, our preliminary estimate does not suggest a more moderate rise in core inflation. On the contrary, we estimate February's annual core inflation growth at around 2.5%-2.6%, which would be slightly above January's 2.5% growth. If this is correct, then month-on-month seasonally adjusted core inflation growth would return to stronger growth of around 0.3% after rising around 0.2% in the previous four months.
February's inflation numbers, especially if our view on core inflation is confirmed, do not prompt the CNB to cut the interest rate faster from the current 3.75% and pose a risk of a higher interest rate compared to our 3.25% outlook at the end of this year.
The actual numbers for core inflation will be known next week on Tuesday after lunch.
Seasonality of selected CPI segments
