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Analysts expect Czech inflation to peak next year
Real estate news By TK
9 October 2007
Prague, Oct 8 (CTK) - September inflation in the Czech Republic suggests that consumer price growth will accelerate further in the rest of the year, and analysts polled by CTK predict it above 3 percent already in October. In the beginning of next year, it may reach 5 percent, they said. The Czech National Bank will not have to raise rates this year because of the firming Czech currency, the analysts said.
Next year it may be forced by the growth in regulated prices and indirect taxes to raise them, though, the analysts agreed. Inflation in the Czech Republic accelerated to 2.8 percent year-on-year in September, from 2.4 percent in August. Month-on-month, consumer prices dropped by 0.3 percent. The figures were in line with economists' expectations. "I expect inflation to continue accelerating in the coming months, because of deregulations, including gas prices, and a growth in the prices of food, following a growth in the prices of agricultural commodities," said CSOB analyst Petr Dufek adding that the price of bread may rise already in autumn.
Dufek said the CNB is likely to raise rates but not as radically as in the previous months. Patria Finance chief economist David Marek said it was important that inflation was below the CNB's forecast. "In view of the firming of the Czech currency in recent weeks a change in interest rates appears to be unlikely in the rest of this year," said Marek. The tax reform and the rising prices of energy will send inflation to 5 percent in early 2008, Marek added.
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