Official data showed that Czech consumer inflation edged up to an annual pace of 3.4% in September 2012 from 3.3% in August 2012.

The Czech Statistical Office said that on a monthly basis, consumer prices fell by 0.1% MoM in September 2012, the same pace as in August 2012.

Rising fuel prices as well as power, gas, water and food prices were behind the rise in 12 month inflation rate. It was slightly lower than the Czech central bank forecast of a 3.5% rate.

Two weeks ago, the central bank cut its key interest rate by a quarter point to an all time low of 0.25%, citing deflationary risks among the reasons.

The bank pointed to a strong koruna currency, weaker domestic activity, slower wage growth and development of domestic prices as factors acting as a drag on inflation, while foreign commodity prices were the only pro inflationary factor.

The CNB expects the economy, which sank into recession in the first quarter, to contract by 0.9% in 2012 before picking up to a 0.8% expansion in 2013.

In 2011, the Czech Republic, a country of 10.5 million people and an EU member since 2004 yet to join the euro zone, posted economic growth of 1.7%.

Source - Agence France Presse

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