At the beginning of the summer, inflation decreased to a single-digit value after more than a year

Prices of food, especially vegetables, milk, cheeses and eggs decreased month-on-month. Prices of clothes and shoes also fell due to sales during July. On the contrary, prices of gasoline and holidays increased. In a year-on-year comparison, the growth rate of food prices continued to slow for the fifth month to the July value of 16.5%.

In July 2023, consumer prices of goods and services declined by 0.3% compared to June, it was the second month-on-month decrease this year. The curve of annual inflation rose continuously from 2021 to February this year, but it has been decreasing for the fifth consecutive month and price growth fell below 10% in July.

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Month-on-month development - July 2023 compared to June 2023

Prices decreased month-on-month in 4 of the 12 main monitored sectors (household expenditure groups). A decrease in prices compared to June was most significantly affected by a decline in food prices by 0.7%, which was influenced by price decreases in milk, cheese and eggs by 2.1% and also vegetables by 4.9%. Prices of bread and cereals, as well as fruit, also decreased month-on-month. Overall, prices fell in 4 out of 9 monitored food items. A more significant month-on-month decrease in food prices was prevented by still slightly rising prices of meat, oils and fats under the influence of higher butter prices.

The summer months also brought a decrease in prices of non-alcoholic beverages, but this year, this trend was not due to the traditional decline in prices of mineral waters and juices, but due to a decrease in prices of coffee, tea, and cocoa by 0.6%.

Seasonal sales in the division of clothing and footwear also contributed to a drop in prices, footwear prices fell by 1.8% month-on-month. Prices of other personal care products went down by 0.5%, including body and sunscreen lotions, sanitary napkins and diapers.

For the second consecutive month, prices in the division of housing and energy also decreased by 0.2% month-on-month. This was most influenced by short-term cheapening of solid fuels, but especially imputed rent, which reflects a decline in prices of building materials.

However, a more significant drop in prices was primarily prevented by an increase in fuel prices by 1.3% and also by a sharp increase in prices of urban passenger transport as one of the components of road transport. At the beginning of summer, prices of package holidays also increased month-on-month by 6.7%.

In July, compared to June, the consumer price index decreased in households of employees by 0.2%, in low-income households by 0.3% and in the households of pensioners by 0.4%.

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

In July, the overall inflation decreased for the fifth consecutive month, prices were by 9.7% higher year-on-year. A year-on-year growth was recorded by all 12 divisions (household expenditure groups), with the exception of transport and a double-digit growth was still in six departments.

Prices of food and non-alcoholic beverages, which, together with housing and energy, represent the two most important items in household expenditures have still the biggest impact on overall inflation. The growth dynamics of food prices has been slowing down for 4 months, in July they rose by 16.5%. Also good news is that the pace of year-on-year growth has slowed down in all 9 food components. More than 20% price growth continued only in prices of vegetables and less important components in terms of weight – snacks, sugar, jam and confectionery. In the month of July, for the first time in 20 months, there was even a drop in prices of any of the 9 food classes at the year-on-year level. Prices of oils and fats declined by 3.3%, which was mainly the result of last year's high increase in prices of butter and oils in July.

Price growth in the division of housing and energy decreased to 8.4% in July, which was the lowest value since December 2021. However, price increases of thermal energy remained above the 15% level, and prices of solid fuel were still higher year-on-year by almost a third.

The base effect, i.e. increases in prices in the previous months, which is reflected in the next 12 months, influenced the inflation in many items of the consumer basket. Prices of goods and services for routine maintenance of households, primary and pre-primary education continued to grow in July as well. Prices in restaurants and cafes, accommodation services, holidays, as well as goods and services of personal care maintained growth above 10%.

Most recently, the drop in prices of recreational services and culture influenced by the cancellation of concession fees had a dampening effect. The dampening effect of year-on-year cheaper fuels (by 16.3%) also lasted from previous months.

In July 2023, the consumer price index increased year-on-year in households of employees by 9.7%, in low-income households by 10.3% and in households of pensioners by 10%.

In total, for the first seven months of 2023, consumer prices increased by 13% year-on-year (in households of employees by 12.9%, in low-income households by 13.9% and in households of pensioners by 13.8%).

Development of core and net inflation

In July, the total annual inflation rate was 9.7%, core inflation reached 10.6% and net inflation reached 8.7%. Month-on-month core inflation remained at the level of June and net inflation reached a value of 0.3%.

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.