Inflation in Czechia

A short history of inflation in Czechia

Currency Reforms (1919 and 1953)

Czechoslovakia twice cancelled most of its citizens' money. In 1919 it stamped and then withdrew part of the circulating Austro-Hungarian crowns to insulate itself from the hyperinflation engulfing its neighbours, an unusually successful piece of monetary surgery. In 1953 the communist government carried out a confiscatory reform that wiped out savings at rates as bad as fifty to one, provoking the largest protests the country saw before 1968.

Transition and Independence (1990 to 1998)

Freeing prices after 1989 produced a sharp burst of inflation, and the currency separated from Slovakia's in February 1993, weeks after the countries did. The Czech National Bank adopted an inflation target in 1998, among the first in the region to do so, and inflation has been low since. The country has not adopted the euro and continues to set its own rates.

Post-Covid Inflation (2021 to 2023)

In Czechia, prices rose fastest in January 2023, at 19.1%. The causes of the post-Covid inflation were global in nature, beginning with the lockdowns: factories and ports closed and the shipping between them fell out of sequence, so goods took longer to make and longer to arrive. Governments had spent heavily supporting household incomes through those closures, so when restrictions lifted there was money waiting to be spent and not enough on the shelves to spend it on. Then in February 2022 Russia invaded Ukraine, disrupting two of the world's largest suppliers of wheat, fertiliser, oil and gas at once, and the cost of everything grown, heated or transported rose with them.

Because the causes were shared, so was the timing: most countries peaked within a few months of one another in late 2022. The major inflation events covers this episode and the others in more detail.