Prices in the Czech Republic have almost tripled since the foundation of
the state in 1993, according to a new analysis produced by Raiffeisenbank.
The Czech crown has strengthened by roughly a quarter in the same period,
the study found.
Raiffeisenbank analyst Helena Horská told the Czech News Agency that if somebody had placed CZK 100 under their pillow in 1993 it would today get them around a third of the goods it would have then.
However, if they wished to spend the same sum abroad they could buy a similar amount as today, because prices abroad have grown at roughly the same tempo as the crown has strengthened, she said.
The Czech Republic’s producer price inflation slowed in May after rising
the previous month, according to data released by the Czech Statistical
Office on Monday.
The producer price index rose 3.8 percent year on year in May, slower than 4.3 percent increase in April. The biggest increase was in ‘electricity, gas, steam and air conditioning’ prices, which rose by 8.6 percent annually in May.
Prices of ‘mining and quarrying’, and ‘food products, beverages and tobacco’ rose by 7.5 percent and 4.0 percent, respectively. Among the main industrial groupings, energy prices grew the most, rising 8.1 percent in annual terms.
The Bank Board of the Czech National Bank raised its basic interest rate to
2 percent, an increase of 0.25 percent, the Czech News Agency reports. It
is the first rise since November 2018 and interest rates are now at their
highest in the past 10 years.
Analysts told the Czech News Agency the increase is mainly due to developments in the country’s economy, with inflation rates rising above predictions in the first quarter of 2019 and the exchange rate for the Czech crown weaker than the bank predicted in February.
The bank has also decided to go ahead with 0.25 percent raises in the Lombard rate, which deals with short-term liquidity loans to commercial banks and the discount rate.
100 years ago the Czechoslovak Assembly decided on the name of the new republic’s currency - the koruna. Despite a variety of original proposals, the delegates ended up being rather conservative in their choice, voting for a name that had also been used for the currency of Austria-Hungary. To commemorate the date, the Czech National Bank has issued a rare collection of gold-silver coins.
To commemorate the 100 year anniversary of the introduction of the crown, the Czech National Bank has issued special coins and banknotes that members of the public can trade for their normal equivalents. The coins and banknotes can be used as currency, but most eager collectors will be unwilling to give them up.
The Czech National Bank on Wednesday issued a second series of three
20-crown coins and a special 100-crown banknote in celebration of the 100th
anniversary of the Czechoslovak currency.
People queued for hours to be among the first to get the coins, which feature portraits of the First Republic economists – First Minister of Finance Alois Rašín; his successor, Karel Englis; and the first governor of the National Bank of Czechoslovakia, Vilém Pospíšil.
The issue is part of the central bank’s “Personalities of the Czechoslovak State” edition featuring the Czech and Slovak political figures.
In October, it released into circulation 20-crown coins with portraits of the founding fathers of Czechoslovakia – Tomáš Garrigue Masaryk, Edvard Beneš and Rastislav Štefánik.
The Czech economy has been outperforming its central European neighbours and is set to reach something of a psychological milestone next year, when GDP per capita is on track to reach 85 percent of the Eurozone average. In more tangible terms, though, the average Czech is enjoying greater purchasing power, and confident they can always find work.
Downward pressure on the Czech crown will likely continue for years to come
due to gradual sell-offs by foreign investors who bought a large volume of
the currency during the three-year period of intervention by the Czech
National Bank to keep the domestic currency artificially weaker, analysts
The crown weakened to below 26 to the euro in mid-November, its lowest level been since June, when the central bank started began a series of interest rate hikes, of which there have been five in 2018.
Pressure on the crown is unlikely to ease for the rest of the year as Czech economic growth lagged behind its regional peers in the third quarter. It is also under pressure from seasonal euro buying by banks that cut crown deposits at the end of the year to reduce payments into the state-run "Resolution Fund".
However, while the crown’s expected weakness in the coming weeks would, technically, open room for a December rate increase some analysts say it now seems more likely policy makers will wait for the year-end effect to fizzle out before they act again.
The Czech National Bank could raise its interest rates twice by the end of the year, said the bank’s governor, Jiří Rusnok, in an interview with Reuters. The bank’s council raised the basic interest rate by a quarter of a percentage point to 1.25 percent in August. Mr. Rusnok stated that a further increase could come as early as this month.