Prague - Czech consumer prices stagnated in a year-on-year as well as month-on-month comparison in June after rising by 0.4 percent annually in May, the Czech Statistical Office (CSU) said today.
The result was influenced mainly by a drop in prices of food and non-alcoholic drinks.
Analysts had expected that inflation would be near zero in June.
"A drop in inflation from 0.4 percent in May was generally expected, but a decrease all the way to a zero level is a surprise," analyst Patrik Rozumbersky of UniCredit Bank said.
"The sharp decline in inflation was caused especially by the prices of potatoes and some other types of food," Rozumbersky said.
Czech National Bank (CNB) governor Miroslav Singer indicated at the end of June that the central bank expects inflation to be near a zero level.
The CNB's Bank Board expects that the growth of consumer prices will be near the CNB's 2 percent inflation target next year.
The price development means that the Czech economy was on the verge of deflation at the end of June.
"Consumers will certainly appreciate that food prices started to decrease finally after four years. In addition, prices of telecommunication services continue to decline, although the effect of last year's price revolution has been exhausted to a larger part," analyst Petr Dufek of the CSOB bank said.
The stagnation will not probably last long, as it is likely that inflation will start to increase again as of next month already and exceed the level of 1 percent at the end of the year, Dufek said.
Food prices dropped by 1.1 percent year-on-year in June after rising by 2.5 percent in May. The decline was driven mainly by a decrease of potato prices by 53.3 percent, a decrease of fruit prices by 5.5 percent, and a slowdown of the annual growth of some other foodstuffs, such as bread, poultry and milk.
The year-on-year development of consumer prices was also considerably influenced by a decrease of housing prices, with electricity prices falling by 10.5 percent and gas prices by 3.1 percent.
In contrast, prices of tobacco products grew by 4.6 percent.
Prices in culture and recreation increased by 0.5 percent, prices in catering and accommodation by 1.6 percent and prices in education by 1.4 percent.