CNB Preview: Room to Stay Patient

Research evidence excerpt

CNB Preview: Room to Stay Patient

n June from

Headline Inflation : CNB Forecast Core Inflation, %Y : CNB Forecast 2.1%Y in May, surprising to the downside versus the CNB forecast of 2.1%Y. While food and

Source: Haver Analytics, Morgan Stanley Research

fuels inflation contributed the most to the drop in headline inflation, CNB-defined core

inflation also ticked down to 2.8%Y from 2.9%Y, coming some 10bp below the CNB

Exhibit 5: Wage growth in 1Q26 may be

forecast. A tick down in non-tradables inflation to 4.5%Y from 4.6%Y and softer non-food

due to higher hours worked

commodities inflation contributed the most to the downside surprise, with imputed rents

%Y, pp

15.0

12.5 inflation easing to 5.2%Y from 5.3%Y in May. Still, core goods inflation ticked up to 0.4%Y

10.0 from 0.3%Y previously. Despite the drop in annual inflation, the more contemporaneous

7.5

5.0 3-month/3-month SAAR measures showed only a marginal loss of momentum. Headline

2.5

0.0 inflation eased to 3.0% from 3.2%Y in May, while core inflation remained stable at 3.0%.

-2.5

-5.0

'17 '18 '19 '20 '21 '22 '23 '24 '25 '26 Inflation to fall at target in 2027 after a bump up in 1Q27: Looking ahead, we see

Average Wage per Hour Worked Average Wage per Employee

inflation re-accelerating to 1.7%Y in July and to slightly above the 2%Y target in August on

the back of the recent increase in oil prices. Further ahead, we project inflation to remain

slightly above target for the rest of the year. We expect food inflation pressures to stayExhibit 6: CZK is tracking ~1% stronger

muted until October before picking up slightly. With unfavourable base effects taking holdthan the CNB forecast

from January 2027, we project headline inflation accelerating further to peak at around

CNB Forecast vs Outcome