December inflation surprised analysts

Price have gone up on a year-on-year basis, but decreased in December.

(Source: Sme)

Despite the original expectations of analysts, the prices at the end of last year grew at a slower pace. Annual inflation amounted to only 1.9 percent in December 2018, as stems from the Statistics Office data.

"The reasons for the December slowdown in inflation can be mainly found in ​​transport prices, for which the demand-pull inflation has also ameliorated," wrote Ľubomír Koršňák in a memo, who is an analyst with UniCredit Bank Czech Republic and Slovakia.

The prices in transport decreased by 3.5 percent month-on-month in December. Moreover, the prices of plane tickets contributed to the inflation slowdown in December.

"In December, the development in food prices was also slightly surprising," said Koršňák, adding that they increased only by 0.1 percent, causing the pace of its year-on-year growth to slow down.

Prices in several areas increased year-on-year as well, such as restaurants and hotels by 4 percent and utilities by 3.2 percent. However, the increase was visible in transport, culture, alcohol and clothes.

Inflation should accelerate again at the beginning of 2019 with other regulated energy prices for utilities, Koršňák said.

"However, the special levy for retail chains and its impact on prices, particularly those of food, remains a big unknown," the analyst added.

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