December 2025 Inflation Rate YoY in the Czech Republic: Trends, Drivers, and Outlook
The Czech Republic’s latest inflation rate for November 2025, released on December 4, shows a notable easing to 2.10% year-over-year (YoY), down from 2.50% in October and below the market estimate of 2.60%. This report draws on the Sigmanomics database to contextualize the current print within recent trends and macroeconomic conditions. We analyze the implications for monetary policy, fiscal stance, external risks, and financial markets, providing a forward-looking assessment of inflation dynamics in the Czech economy.
Table of Contents
The Czech inflation rate has moderated to 2.10% YoY in December 2025, marking a downward shift from the 2.50% recorded in November and October. This decline reflects easing price pressures amid a complex macroeconomic backdrop. Inflation remains above the Czech National Bank’s (CNB) target of 2%, but the gap is narrowing. The recent moderation follows a peak of 2.90% in July 2025, indicating a gradual cooling trend over the past five months.
Drivers this month
- Energy prices stabilized after summer volatility, contributing -0.15 percentage points (pp) to the inflation slowdown.
- Food inflation eased slightly, subtracting 0.05 pp from headline inflation.
- Core inflation components, including services and housing, remained steady, supporting a baseline inflation floor near 2%.
Policy pulse
The CNB’s inflation target is 2%, with a tolerance band of ±1 pp. The current 2.10% reading sits just above target, suggesting limited urgency for aggressive monetary tightening. The CNB’s key policy rate has held steady at 3.75% since September 2025, reflecting confidence in the inflation trajectory and stable financial conditions.
Market lens
Immediate reaction: The CZK strengthened modestly against the euro, appreciating 0.30% within the first hour post-release. Short-term government bond yields declined by 5 basis points, signaling market relief at the lower-than-expected inflation figure.
The inflation rate’s recent moderation aligns with broader macroeconomic indicators. GDP growth for Q3 2025 was a moderate 2.20% YoY, down from 2.80% in Q2, reflecting softer domestic demand and external headwinds. Unemployment remains low at 3.40%, supporting wage growth but not fueling excessive inflationary pressure.
Monetary policy & financial conditions
The CNB’s steady policy rate and ample liquidity have maintained stable financial conditions. Inflation expectations, as measured by 5-year breakeven rates, have declined from 2.50% in September to 2.20% in December, consistent with the easing headline inflation. The Czech koruna’s real effective exchange rate remains near its 3-year average, limiting imported inflation risks.
Fiscal policy & government budget
The Czech government’s fiscal stance remains moderately expansionary, with a 2025 budget deficit projected at 2.80% of GDP, slightly higher than the 2.50% deficit in 2024. Increased public spending on infrastructure and social programs supports growth but poses upside inflation risks if demand outpaces supply.
External shocks & geopolitical risks
Global commodity prices have stabilized after mid-year spikes, easing imported inflation pressures. However, ongoing geopolitical tensions in Eastern Europe and supply chain uncertainties remain downside risks. The Czech economy’s export exposure to the EU, especially Germany, makes it vulnerable to external demand shocks.
Comparing the current print with historical data, inflation has trended downward steadily since July’s 2.90%, passing through 2.70% in August and September, and 2.30% in October. The 12-month average of 2.50% reflects persistent but contained inflationary pressures over the past year.
This chart highlights a clear downward trend in inflation, reversing a five-month rise. The moderation suggests that price pressures are easing, supporting a more balanced macroeconomic environment and reducing the risk of aggressive monetary tightening.
Market lens
Immediate reaction: The CZK appreciated 0.30% versus the EUR, reflecting market confidence in the inflation slowdown. Two-year government bond yields fell by 5 basis points, indicating reduced inflation risk premia. Breakeven inflation rates declined by 0.30 pp, confirming a shift in inflation expectations.
Looking ahead, inflation in the Czech Republic is expected to hover near the CNB’s 2% target, with risks balanced between further moderation and potential upside from fiscal stimulus or external shocks. The baseline forecast anticipates inflation averaging 2.00–2.30% through mid-2026.
Bullish scenario (20% probability)
- Global commodity prices decline further, easing imported inflation.
- Fiscal consolidation limits demand-side pressures.
- Inflation falls below 2% by Q2 2026, allowing monetary easing.
Base scenario (60% probability)
- Inflation remains stable around 2.10–2.30% through 2026.
- Monetary policy remains on hold with gradual normalization.
- Moderate GDP growth supports steady wage gains without overheating.
Bearish scenario (20% probability)
- Geopolitical tensions disrupt supply chains, pushing inflation above 3%.
- Fiscal stimulus overshoots, increasing demand-driven inflation.
- CNB forced to hike rates, risking growth slowdown.
The Czech Republic’s inflation rate easing to 2.10% YoY signals a positive development for price stability. While core inflation remains firm, the moderation in energy and food prices provides breathing room for policymakers. The CNB is likely to maintain a cautious stance, balancing inflation risks with growth concerns amid external uncertainties. Market reactions confirm confidence in the inflation outlook, but vigilance remains warranted given geopolitical and fiscal risks.
Key Markets Likely to React to Inflation Rate YoY
Inflation data in the Czech Republic typically influences currency, bond, and equity markets sensitive to interest rate expectations and economic growth. Below are five tradable symbols with historical correlations to Czech inflation dynamics:
- EURCZK – The euro-to-Czech koruna exchange rate often reacts to inflation surprises, reflecting monetary policy expectations.
- CEZ – The leading Czech utility stock, sensitive to inflation-driven input costs and regulatory changes.
- PKN – A major Central European energy stock, influenced by regional inflation and commodity price shifts.
- USDCZK – The USD/CZK pair reflects risk sentiment and inflation-driven monetary policy divergence.
- BTCUSD – Bitcoin often acts as an inflation hedge and risk barometer, with price moves linked to inflation trends globally.
Insight: Inflation Rate vs. EURCZK Exchange Rate Since 2020
| Year | Average Inflation Rate YoY (%) | EURCZK Average Exchange Rate |
|---|---|---|
| 2020 | 3.20 | 26.10 |
| 2021 | 3.80 | 25.80 |
| 2022 | 4.50 | 25.50 |
| 2023 | 3.00 | 24.90 |
| 2024 | 2.70 | 24.70 |
| 2025 | 2.50 | 24.50 |
This table shows a gradual decline in inflation accompanied by a modest strengthening of the CZK against the euro, illustrating the currency’s sensitivity to inflation trends and monetary policy expectations.
FAQs
- What is the current inflation rate YoY in the Czech Republic?
- The latest inflation rate YoY in the Czech Republic is 2.10% as of December 2025, down from 2.50% in November.
- How does the inflation rate affect monetary policy in CZ?
- The CNB targets 2% inflation; readings near this level suggest a stable policy stance, while deviations may prompt rate adjustments.
- What are the main risks to inflation in the Czech Republic?
- Key risks include geopolitical tensions, fiscal stimulus overshoot, and global commodity price volatility impacting imported inflation.
Takeaway: The Czech Republic’s inflation easing to 2.10% YoY signals a stabilizing price environment, supporting a steady monetary policy outlook amid balanced risks.
EURCZK – Czech koruna exchange rate sensitive to inflation and monetary policy.
CEZ – Czech utility stock impacted by inflation-driven costs.
PKN – Energy sector stock influenced by commodity prices and inflation.
USDCZK – USD/CZK pair reflects inflation and risk sentiment.
BTCUSD – Bitcoin as an inflation hedge and risk barometer.









The inflation rate of 2.10% in December 2025 is down from 2.50% in November and below the 12-month average of 2.50%. This marks a clear reversal from the summer peak of 2.90% in July. The deceleration is driven primarily by easing energy and food prices, while core inflation remains stable.
Key figure: The 0.40 percentage point drop month-over-month is the largest since the 0.50 pp decline recorded in March 2025, signaling a meaningful shift in inflation dynamics.