Czech headline inflation rose to a fresh 24-year high in March, statistics office data showed on Monday, adding to expectations that interest rates, already at their highest since 2001, will continue to rise.
The Czech National Bank lifted its benchmark rate by 50 basis points to 5.00% at the end of March and said it was ready to tighten policy further to keep inflation expectations anchored while war in Ukraine pushes prices higher.
The headline year-on-year inflation rate rose to 12.7%, above a Reuters poll forecast of 12.4% and reaching its strongest since May 1998.
On a month-on-month basis, prices rose 1.7%.
"The March reading is an impulse for the central bank to continue with raising interest rates," said Petr Dufek, chief economist at Banka Creditas, expecting a further 50 basis point rise at the next policy meeting in May.
The crown was little changed at 24.430 to the euro after the data. It is trading at around its strongest since Russia's invasion of Ukraine on Feb. 24, after weakening to almost 26 in early March.
The Czech central bank launched market interventions to boost the crown in early March but has not needed to go into markets "for some time now", according to minutes from its March 31 policy meeting released last Friday.
The bank has also debated the potential use of the exchange rate in an effort to subdue inflation.
While Governor Jiri Rusnok and another member of the seven-person board said thoughts of its use should not be dismissed, other central bankers said they did not feel a need to introduce it as a policy tool, according to the minutes.
Russia's invasion of Ukraine, which Moscow calls a "special military operation", has added to strong inflationary pressures, largely through rising prices on commodity markets.
Inflation had already been soaring in the Czech Republic and around central Europe since last year, pushing policymakers into policy tightening.
(Reporting by Jason Hovet and Robert Muller in Prague; Editing by David Holmes)