Household spending in the Czech Republic increased over the past year, while new data for the opening month of this year show that the rise in living costs has eased to its lowest pace in many years, offering a mixed but generally stable picture of consumer conditions.

Official statistics indicate that the value of goods sold in stores, not including vehicle purchases, was moderately higher than in the previous year. Sales through online channels and purchases of everyday items contributed to the overall improvement, although the final months of the year showed a gentler rhythm compared with earlier periods. Economists say the yearly gain reflects gradually improving purchasing power and continued willingness among households to spend, even if caution remains visible in some segments.

Separate figures released at the same time show that the cost of goods and services in January rose only slightly compared with a year earlier, marking the slowest annual increase seen in nearly a decade. Lower energy-related expenses played an important role in the calmer price environment, while certain services and selected food categories still recorded noticeable increases.

The combination of firmer retail turnover and milder price development suggests that consumers entered the new year under more favourable financial conditions than in recent periods. Analysts note, however, that the moderation in prices does not eliminate all pressures on household budgets, as some areas of spending continue to trend upward. Even so, the latest data point to a more balanced economic backdrop, with spending activity holding steady while overall price growth remains contained.

The Czech economy is expected to grow faster this year than previously anticipated, according to updated projections released by the country’s central bank, while the national currency strengthened following the publication of January price figures and a decision to leave borrowing costs unchanged.

In its latest assessment of the domestic economy, the central bank indicated that economic activity should expand at close to three percent this year, representing a more optimistic view than it presented late last year. The revised estimate reflects improving household consumption and a gradual recovery in external demand, while price growth is now seen as more subdued than earlier forecasts suggested. The bank also signalled that economic expansion could remain at a similar pace next year, although inflation is expected to move slightly higher compared with this year’s level.

The updated outlook places the central bank among the more confident forecasters regarding near-term economic performance. Government institutions recently adjusted their own expectations upward as well, though their projections remain marginally more cautious.

Financial markets reacted quickly to the combination of new inflation figures and the monetary authority’s decision to keep its main interest rate steady. The Czech koruna strengthened against both the euro and the US dollar during trading, reflecting investor confidence that price pressures remain under control and that policy settings are unlikely to shift abruptly in the near future.

Data released earlier in the day showed that consumer price growth at the start of the year remained relatively low compared with recent historical standards, even though certain service sectors continue to experience higher costs. Central bank officials reiterated that maintaining a prudent policy stance is still necessary to ensure inflation remains close to the target over the medium term.

Equity trading in Prague moved in the opposite direction, with the main stock index easing from recent highs as several large-capitalisation shares declined. Analysts noted that the currency’s appreciation and stable interest rate environment suggest markets currently view the country’s economic trajectory as balanced, combining moderate growth with contained inflation, although future developments will depend on both domestic spending trends and the broader European economic climate.