As the world continues to battle with rising inflation, it was the turn of the Czech Republic to announce a new multi-year inflation high.
Friday, June 10th saw the release of weak economic news from the Czech Republic. Data published from the statistics office revealed that Czech headline inflation soared to 16% in May.
Inflation in the Czech Republic is now at a three-decade high and showing no signs of slowing down. Last month’s figure was also far higher than market expectations. Analysts had predicted an increase of 14.9% after April registered an inflation rate of 13.2%.
As of April, the Czech Republic experienced the third-highest inflation in the EU, which at the time was averaging 8.1% inflation. The only countries exceeding the Czech inflation rate were Estonia at 19.1% and Lithuania at 16.6%.
Now, Cech citizens can most likely expect an interest rate hike later this month when the board of the Czech National Bank meets. Markets are now expecting an increase in the interest rates that would take the interest rate above 6%.
Pavel Sobisek, chief economist with UniCredit in Prague, commented on the latest financial news from the Czech Republic, saying:
“After this figure, I believe the bank will go for a big hike, not just a 75 basis point move already indicated. The question is how much more.”
Record Commodity Prices Hurt Eastern and Central Europe
The Czech Republic is one of a number of Central and Eastern European countries that have already raised interest rates sharply in an effort to combat the rising inflation. Fueling the rise has steep increases in the price of commodities.
Data also released on Friday from Romania, however, showed that Romania’s headline inflation hit14.5% in May. This steep increase has bolstered speculation that interest rates will rise in Romania also. The central bank raised its benchmark interest rate by a larger-than-expected 75 basis points to 3.75%. This was the sixth consecutive interest rate hike.
