Tuesday, 17 March 2026
Producer prices in the Czech Republic continued to decline in February, suggesting a potential easing of consumer price pressures in the coming months. However, analysts warn that the conflict in the Middle East, particularly involving Iran, could offset this trend through higher energy and commodity costs.
According to data published by the Czech Statistical Office (ČSÚ), industrial producer prices fell by 2.9% year-on-year, marking the 13th consecutive monthly decline. Agricultural producer prices dropped by 8.1%, extending a downward trend that has continued for three years and intensified in recent months. In contrast, prices for construction work and market services for businesses continued to rise.
On a month-on-month basis, prices declined only in agriculture, while industry, construction and services recorded slight increases.
Analysts note that under stable conditions, the current development would indicate a slowdown in consumer inflation, particularly for food. However, external factors are expected to influence the outlook.
“The year-on-year price reduction is mainly due to cheaper electricity – thanks to the favourable development of prices on the exchanges, and also because of the state’s decision to forgive companies and households the fees for supported renewable energy,” said Tereza Krček, an analyst at Raiffeisenbank.
Vít Hradil, chief economist at Investika, said the broader inflation outlook may shift. “For the future development of consumer inflation, this data would indicate very calm times, but in the coming period the war in Iran is likely to speak to prices through more expensive energy commodities, chemicals, fertilizers and other production inputs,” he said.
Further price pressures are expected to emerge in the near term. “Even in the March figures, the price jump caused by the dramatic increase in oil prices and its derivatives will be visible in the production prices in the industry,” said Petr Dufek, chief economist at Creditas Banka. He added that higher costs are likely to pass through to agriculture and eventually to consumers. “The period for consumers of pleasantly very low inflation may be over quite soon,” he said.
Radomír Jáč, chief economist at Generali Investments CEE, also pointed to the impact of energy markets. “The rise in mineral fuel prices, including oil, with an impact on fuel prices, will be very rapidly affected, and agriculture may be affected by the global shortage of fertilizers, or their price increase, which is also one of the consequences of the conflict in the Middle East,” he said. He added that the duration and intensity of the conflict will be a key factor in determining the scale of the impact.
Looking at sector details, industrial price declines were driven mainly by lower energy costs, with prices for electricity, gas and related services falling by 7.1% year-on-year. Prices also declined for chemicals and food products, including dairy. By contrast, prices increased in areas such as wood products and machinery maintenance. Among industrial groupings, energy prices fell by 7.4%, while prices for durable goods rose by 1.7%.
In agriculture, the decline was led by crop production, where prices dropped by 14.4% year-on-year. Significant decreases were recorded for fruit, potatoes, vegetables, cereals and oilseeds. Livestock prices fell more moderately, although pig and milk prices declined, while cattle, poultry and eggs recorded increases.
Construction work prices rose by 2.7% year-on-year, while material costs increased by 1.9%. Market services for businesses saw annual growth of 3.4%, driven in part by higher prices for advertising, market research and employment services.
Foreign trade data for January showed export prices declining by 3.9% year-on-year and import prices by 5.6%, partly reflecting the strengthening of the Czech koruna against the euro and the US dollar. On a monthly basis, both export and import prices increased slightly, influenced primarily by rising electricity prices.
Analysts expect that, depending on how the geopolitical situation develops, producer price inflation could increase again later this year. “Depending on the duration and intensity of the conflict, we can expect production inflation to rise by higher tenths to low single percentage points during this year,” Hradil said.
Source: CTK
