Inflation continues to decrease, reaching 8.9% in August

This year, for the first time month-on-month, the prices of all food items became lower, especially seasonal vegetables and fruits, but this decrease was balanced by a significant increase in the price of fuel in August. Consumer prices of goods and services thus maintained the average July level in August. Year-on-year growth in food prices continued to slow down to 13.6%.

The annual inflation curve has a downward trend since March of this year. Currently, under the influence of the slowdown in the growth of food prices and housing costs, it reached a value by 8.9%, which is the lowest value since February 2022. Compared to the previous month, consumer prices of goods and services did not change on average, although there was a downward movement of prices in half of the 12 main household expenditure groups.

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Monthly development – August 2023 compared to July 2023

The unchanged average price level of goods and services in August at the level of last month was the result of a price drop in in 6 of the 12 main monitored sectors (household expenditure groups), which, on the other hand, mainly compensated for the significant month-on-month increase in fuel prices.

The greatest influence affecting inflation downwards month-on-month had the prices of food, drooping by an average by 1.1%. The reduction in prices, which was overall the most significant in the last three years, occurred in all nine monitored food items. Above all, the prices of vegetables dropped by 4.6%, fruit by 2.8%, milk, cheese and eggs by 0.8% (affected by the drop in egg prices), bread and cereals by 0.9%, but also meat by 0. 2%, oils and fats by 1.1%, sugar and confectionery by 0.9%.

Among the other expenditure groups that recorded a price drop, lower prices in housing and energy had a more significant impact on month-on-month inflation, in particular the reduction of imputed rent by 0.5% (decrease in prices of construction materials) and solid fuels by 1.7%.

Lower prices of mineral waters and juices, beer, wine and seasonal sales of footwear also contributed to the reduction of the average price level in August.

The opposite, upward trend was noted in particular by the prices of fuel, which rose by 7.3% compared to July, thus compensating for a more significant drop in food prices. However, in August there were higher prices for pharmaceutical products, outpatient, catering and accommodation services. Prices of package holiday tours and transport-related insurance were also more expensive.

In August compared to July, the consumer price index increased by 0.1% in households of employees, remained unchanged in low-income households and decreased by 0.2% in households of pensioners.

Year-on-year development - August 2023 compared to August 2022

For the sixth consecutive month, a growth rate of the overall inflation was again slowed down to the current 8.9% and it was affected by a year-on-year growth in all 12 divisions (household expenditure groups), still double-digit in 5 of them. In 7 expenditure groups, price increases moderated their pace. The two most important items in household expenditure still have the greatest impact on the overall inflation - food and non-alcoholic beverages and housing and energy.

A growth dynamics of food prices slowed down for the fifth month, in August they rose year-on-year by 13.6%. The pace of price increases slowed down in all 9 components. A price growth above 20% remained only in the item of sugar, jam and confectionery. Prices of oils and fats, where a year-on-year decrease of 6.8% was mainly due to their sharp increase in prices last year, again recorded a decrease.

A growth of prices in housing and energy slowed down and decreased to the level of 7.3%, lower value was only at the end of 2021. However, prices of solid fuels and thermal energy remained above the level of 20% at 17%, prices of maintenance and repairs of the dwelling fell to 15%.

A more significant decrease in the overall inflation was also hindered by rising prices in food and beverage service activities, healthcare and education. The most significant price increases were recorded in pharmaceutical products and outpatient services, especially dental services, which again came close to a year-on-year increase of 20%. Prices of goods and services for routine household maintenance increased by 17.9% compared to last year, prices of primary and pre-primary education increased by 30.8% compared to last year.

Although fuel prices significantly grew month-on-month, they increased by 4.5% compared to August 2022.

In August 2023, the consumer price index increased year-on-year in households of employees by 8.9%, in low-income households by 9.4% and in households of pensioners by 8.8%

In total, for the first eight months of 2023, consumer prices increased by 12.5% year-on-year (in households of employees by 12.4%, in low-income households by 13.3% and in households of pensioners by 13.1%).

Development of core and net inflation

In August, the total annual inflation rate of 8.9%, core inflation reached 9.6% and net inflation reached 8.4%. Core inflation remained month-on-month at the level of July and net inflation reached 0.4%.

Core inflation is affected by a price level growth after excluding the impact of changes in regulated prices (e.g. energy prices) and other administrative measures (e.g. tax adjustments, etc.). Net inflation is core inflation without changes in food prices.