Czech Inflation Accelerates to 1.7% in July, Reinforcing Rate Hold Expectations

• Czech inflation rose to 1.7% in July, matching expectations.
• Driven by slower energy cost declines and rising services inflation.
• Reinforces expectations for the Czech National Bank to hold rates.

The Czech Republic’s consumer price inflation accelerated to 1.7% year-over-year in July, up from 1.5% in June, aligning with market expectations. This increase was primarily driven by a slower decline in energy costs, including motor fuels, following the conclusion of government mitigation measures. While deflation in food and non-alcoholic beverages eased, services inflation continued its upward trend. Despite the uptick, the inflation rate remains below the central bank’s target, strengthening expectations that the Czech National Bank (CNB) will maintain its current interest rates at its upcoming meeting. Separately, retail sales growth in June showed a moderated pace.