The CNB comments on the May 2025 inflation figures
Annual inflation reached 2.4% in May and thus remains close to the Czech National Bank’s inflation target. The acceleration compared to April (1.8%) was expected in the forecast and is due mainly to volatile prices of food, alcohol and tobacco. In particular, alcohol prices were probably initially affected by Easter discounts and returned to their previous levels in May. The deviation of the May figures from the forecast is therefore very small in all the monitored components.
However, inflation is not yet stabilised and requires a cautious monetary policy approach. This is mainly because of core inflation, which increased to 2.8% and will stay close to this level in the months ahead. This reflects the cost of owner-occupied housing, which is accelerating on the back of strong growth in house prices. As a result, market services inflation remains elevated (at 4.6%), even though we are seeing a slight slowdown in the growth of other services prices (in restaurants, for example).
We expect headline inflation to stay between 2% and 3% in the months ahead. The forecast expects it to decline to the CNB’s 2% target next year.
Petr Sklenář, Executive Director of the Monetary Department
Inflation reaches 2.4% in May
The CNB comments on the May 2025 inflation figures
Annual inflation reached 2.4% in May and thus remains close to the Czech National Bank’s inflation target. The acceleration compared to April (1.8%) was expected in the forecast and is due mainly to volatile prices of food, alcohol and tobacco. In particular, alcohol prices were probably initially affected by Easter discounts and returned to their previous levels in May. The deviation of the May figures from the forecast is therefore very small in all the monitored components.
However, inflation is not yet stabilised and requires a cautious monetary policy approach. This is mainly because of core inflation, which increased to 2.8% and will stay close to this level in the months ahead. This reflects the cost of owner-occupied housing, which is accelerating on the back of strong growth in house prices. As a result, market services inflation remains elevated (at 4.6%), even though we are seeing a slight slowdown in the growth of other services prices (in restaurants, for example).
We expect headline inflation to stay between 2% and 3% in the months ahead. The forecast expects it to decline to the CNB’s 2% target next year.
Petr Sklenář, Executive Director of the Monetary Department