Czech Economy: Real Wages Rise as Prices Gradually Stabilise

Stable prices in sight: Following the decline in the inflation rate, most Czech companies do not expect significant price increases next year. Experts view this as a positive signal for consumption and economic growth.

The inflation trend in the Czech Republic confirms a gradual stabilisation of the price level. Annual inflation fell to 2.1 per cent in November, reaching its lowest level since April this year. According to the Czech Chamber of Commerce, this is another indication that price developments are increasingly normalising.

The overall slower price increases in November were largely due to falling food prices, such as fruit, butter, and pork, according to data from the Czech Statistical Office. The decline in energy prices also provided relief. While gas and electricity prices continued to fall year on year, rent increases and prices for certain services remained moderate and stable. On a monthly basis, consumer prices even fell by 0.3 per cent.

Business expectations also point to a phase of greater price stability. According to the Czech Chamber of Commerce’s autumn survey (“Komorový barometr”), which involved around 450 companies from all regions and economic sectors, the majority of firms do not expect significant price increases next year. More than a quarter of companies plan to keep prices unchanged. A similarly sized group anticipates price adjustments of no more than three per cent, mostly within the tolerance range of the Czech National Bank’s inflation target. Only 8.9 per cent of surveyed firms expect a stronger price rise of more than five per cent.

According to the Chamber, this points to a return to price stability. “The inflation rate in November is another sign that the development of consumer prices is gradually normalising. In our macroeconomic forecast, we expect inflation in 2025 to be around 2.5 per cent. The current data are consistent with this assessment,” explained the Chamber President, Zdeněk Zajíček. Declining inflation also creates room for rising real wages and strengthens private consumption, which is likely to remain the main driver of economic growth next year.

For 2026, the Chamber’s forecast anticipates an average inflation rate of 2.3 per cent. At the same time, real wages are expected to rise by 2.7 per cent next year, after likely growing by up to 3.9 per cent in the current year. “The combination of lower inflation and further rising wages creates favourable conditions for domestic demand, which is expected to make a significant contribution to the growth of the Czech economy during the forecast period,” said Roman Renda, analyst at the Chamber of Commerce. From 2026 onwards, in addition to private consumption, business investment and a slightly positive contribution from foreign trade are also expected to support economic growth.