economy Inflation in the Czech Republic has been rising recently, and prices here are growing at the fastest rate in the last five years. According to economists, however, inflation has peaked, so a turnaround is expected soon. Prices for animal products should stabilize again, and fuel prices will slow down next year thanks to cheaper oil. We can therefore expect inflation to ease in the coming months.
It is precisely because Czechs are earning more that food prices are rising. For butter, the increase is 51%; for eggs, 37%. In addition to food, real estate prices and interest rates will also rise. We have also been spending significantly more in recent months, which is reflected in the overall economy.
The term inflation can also be understood as the rise in the price level over time, which is measured in all European Union countries by the consumer price index. For the state’s financial sector, lower inflation is most advantageous, as it is a factor in interest rate movements, and a high inflation rate overheats the state’s
economy. For example, in 2008, inflation rose by 3.7 percent over the course of the year. Inflation was higher than in the Czech Republic only in the Baltic states, Romania, and Bulgaria. From 2002 to 2007, the Czech Republic was among the countries with the lowest inflation. However, the highest rate was in 1998, at 10.7%, and in 1994, at 10%.
During periods of higher inflation, only those citizens with long-term fixed loan payments benefit. For most, however, it results in losses in the form of higher expenses for purchased goods and services.
Deflation, which we understand as the opposite of inflation, is good news for citizens, as they can buy more goods for the same wage. On the other hand, this phenomenon is not very welcome for the national economy. Creditors have trouble repaying their debts, which are higher due to deflation, and people save less because interest rates aren’t high enough to make it worthwhile. At the same time, it’s linked to higher unemployment.
Starting in January 2018, the consumer price index will be calculated according to a newly introduced classification that provides a more detailed breakdown of the consumer basket.