Czech inflation rate picks up in June

The Czech Republic's year-on-year inflation rate rose to 2.9 percent in June compared with 2.7 percent in May, official figures showed Monday. The data, which were broadly in line with market expectations, confirm a picture of rising inflationary pressures in the Czech economy. The Czech central bank raised interest rates to combat such pressures in June. Key interest rates were raised by 25 basis points to 2.25 percent from a record low of 2 percent. Most market players expect the Czech central bank to take a cautious line on interest rates but many do expect further hikes by the end of the year. The central bank is concerned not to hit the wider economy, which is growing less rapidly than most of the other nine countries which joined the European Union on May 1. The Czech economy grew 3.1 percent year-on-year in the first quarter of 2004 compared with growth of 6.9 percent in neighboring Poland and 5.5 percent in neighboring Slovakia.