Czech inflation fell from 2.1% yoy in May to 1.5% yoy in June, which was lower than expected. We had estimated June inflation at 1.7% yoy, while the market consensus was 1.8% yoy. The deviation was even larger in the case of the CNB’s May forecast, which predicted June inflation to remain unchanged at 2.1% yoy.

Czech inflation fell from 2.1% yoy in May to 1.5% yoy in June, which was lower than expected. We had estimated June inflation at 1.7% yoy, while the market consensus was 1.8% yoy. The deviation was even larger in the case of the CNB’s May forecast, which predicted June inflation to remain unchanged at 2.1% yoy.

The decline in inflation in June was primarily due to lower fuel prices. These fell by 8.1% mom in June, reflecting a significant drop in crude oil prices on global markets following the easing of tensions in the Middle East and the reopening of the Strait of Hormuz. Although fuel prices remain higher than a year ago, their growth slowed from 26% to 15% yoy. This contributed 0.3-0.4pp to the decline in headline inflation in June. The fuel price developments were broadly in line with our expectations.

The main reason for the deviation from our forecast was the significant fall in food prices. The price of food and non-alcoholic beverages fell by 1.3% mom, leading to an acceleration in their year-on-year decline from 1.9% in May to 3.4% in June. This was only partially offset by a 0.4% mom increase in the prices of alcoholic beverages and tobacco, which saw their year-on-year growth accelerate from 3.7% to 4.3%. Overall, the adverse effects of the conflict in the Middle East have not yet been reflected in food prices, which are likely to continue being influenced by last year’s strong agricultural harvest.

Household electricity and gas prices continued to decline slightly. Electricity prices fell by 0.1% mom and 11.5% yoy in June. The year-on-year trend continued to reflect the impact of transferring renewable energy payments from households to the state since January. Gas prices were 0.3% mom and 5.2% yoy lower in June, while heating prices rose by 0.1% mom and 1.7% yoy. Household energy prices are based on longer-term energy contracts, and the proportion of fixed-price contracts has increased in recent years. This may mitigate the impact of significant fluctuations in the spot energy markets.

Core inflation slowed from 2.9% to 2.8% yoy in June, falling behind expectations. We and the CNB had expected core inflation to remain at 2.9% yoy for the fourth consecutive month. After seasonal adjustment, we estimate that monthly core inflation was essentially unchanged at 0.2% mom in June. Services inflation slowed from 4.7% yoy in May to 4.5% yoy in June. Within this, growth slowed for both imputed (from 5.3% to 5.2% yoy) and paid rents (from 6.5% to 5.9% yoy). Excluding these two rent components, our calculations show that core inflation increased slightly from 1.8% yoy in May to 1.9% yoy in June, but remained below the CNB’s 2% target. The month-on-month trend was significantly influenced by a 2.6% increase in package holiday prices. However, this was largely a traditional seasonal fluctuation, as a similar 2.4% mom increase in holiday prices occurred in June last year.

Inflation forecasts are likely to be gradually revised downwards. This is supported by a turnaround in the energy markets, driven by stabilisation in the Middle East. Oil prices have fallen significantly, as have the prices of agricultural fertilisers. However, the decline in the price of refined petroleum products (as well as natural gas) has been less pronounced than for crude oil. This may be due to limited refinery capacity resulting from damaged energy infrastructure in the Middle East. Overall, we believe that headline inflation may accelerate towards 3% yoy in 2H26, as the second-round effects of more expensive energy and other production inputs may be reflected with a lag. The lower comparative base will also contribute to accelerating year-on-year inflation in 2H26 and at the beginning of next year. Nevertheless, we have lowered our inflation forecasts from 2.4% to 2.2% for this year and from 2.8% to 2.7% for next year. While we cannot rule out further downward revisions to our inflation forecasts, renewed tensions in the Middle East in recent days are offsetting these trends. The inflation acceleration we expect next year is related not only to the lagged effects of more expensive production inputs, but also to domestic factors such as a resilient economy, rapidly rising wages, structural imbalances in the housing market and an anticipated expansion in fiscal policy.

Starting Wednesday, July 1, 2026, Colt shares will trade ex-dividend for fiscal year 2025. The share price typically declines on the first day without dividend rights.

At the Annual General Meeting on Friday, June 26, 2026, the Board of Directors’ proposal to pay a dividend of CZK30 per share was approved.

This dividend corresponds to a payout ratio of 92.6% and offers a gross yield of +3.3%.

Starting Wednesday, July 1, 2026, Colt shares will trade ex-dividend for fiscal year 2025. The share price typically declines on the first day without dividend rights.

At the Annual General Meeting on Friday, June 26, 2026, the Board of Directors’ proposal to pay a dividend of CZK30 per share was approved.

This dividend corresponds to a payout ratio of 92.6% and offers a gross yield of +3.3%.