In Decemeber, inflation decreased to 15.8% vs. expected 16.2% in line with latest downside surprises in many European economies. However, in January, a renewed increase of the inflation rate is likely due to traditional repricing coupled with reshuffling in fiscal measures. |
We expect the Czech economy to slip into a technical recession in 4Q22 on the back of deteriorating demand, but to start improving gradually in 2H23. Inflation is expected to abate slowly reaching single digits by mid-2023. CNB will likely keep interest rates stable until 3Q23. |