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Czech inflation ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Jason Hovet and Robert Muller in Prague
Editing by Christina Fincher)
March 10 (Reuters) - Czech headline inflation eased to
16.7% year-on-year in February, reinforcing the view that
surging price growth is moving past a peak as the central bank
seeks to maintain stable interest rates.
Inflation around central Europe has surged in the past year,
more than elsewhere in Europe, as food prices have jumped
alongside energy costs.
Central banks in the region started battling price pressures
in 2021, sooner than other European Union policymakers, and have
thus ended hiking cycles even as global central banks like the
ECB and U.S. Federal Reserve continue to tighten.
The Czech central bank has held steady on policy since
mid-2022 despite criticism it needs to do more to secure
inflation returning to its 2% target.
Inflation slowed in February, after hitting 17.5% in January
amid repricing actions at the start of the year. Analysts in a
Reuters poll had expected the headline rate at 16.6% in
February.
On a monthly basis, prices rose 0.6%.
Inflation "only symbolically neared the inflation target,"
Banka Creditas chief economist Petr Dufek said, adding the first
signs of discounts on goods were starting to appear.
"Weaker demand, which is seen in falling household
consumption and retail sales, should increasingly limit the
scope for price increases," he said.
"Sellers will have to more often decide whether to have full
warehouses or cut prices."
The Czech economy slipped into a technical recession in the
fourth quarter under the weight of sinking household spending as
consumers cut back on purchases due to high inflation.
The central bank raised its key interest rate to 7.00% from
0.25% between June 2021 and June 2022, but new Governor Ales
Michl has advocated stable rates to anchor the economy since
taking the helm in July last year.
Generali Investments CEE chief economist Radomir Jac said
inflation should continue easing in the coming months, reaching
single digits by the third quarter.
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