#LifeInCzechia As you may have noticed, prices of energy, rent, food and services have recently gone up in Czechia. Inflation is high. Although this seems to be happening due to war in Ukraine, the truth is somewhere else. Unfortunately, this event is still relatively fresh and hasn’t fully affected our economy yet. There are other factors that are contributing to inflation. They include the energy crisis in Europe and the housing crisis in Czechia.
Inflation in Czechia has grown from 12.7% to 14.2% in April 2022.
According to the Czech TV, inflation in Czechia has grown from 12.7% to 14.2% in April 2022. We’re seeing a price rise in rents, fuel and food. This has been happening due to increasing costs of production, shortage of raw materials (e.g. computer chips), energy crisis, housing crisis, and unprecedented demand for goods and services.
Another reason for growing inflation is also the fact that it was very low last year. According to European Central Bank, consumer prices were quite low at the peak of the pandemic (partially because Germany decreased their VAT). That’s another reason why we feel like prices are sky-high right now – we’re seeing a big difference.
Analytics believe that inflation will continue growing and might soon reach 15%. The Czech National Bank is therefore planning on, once again, increasing interest rates to slow it down.
It is likely that the war in Ukraine will not help matters either once it fully affects the market. Therefore, it is not apparent at the moment when inflation will stop growing.
As we already informed you last fall, there’s an energy crisis in Europe. Simply put, there isn’t enough gas and electricity to go around, which is increasing its prices. As a consequence of this issue, several energy providers had to close their doors.
Although the war in Ukraine will take a while to affect the Czech economy, we should expect that it will be reflected in energy prices as well. This is because we are currently getting our gas from Russia and this may stop anytime due to sanctions or Russia simply closing the taps.
Ultimately, It is quite likely that your monthly electricity deposit bill is going to increase.
There’s no need to panic, but a good idea is to get yourself informed about the situation. Talk to your landlord as soon as you can to find out if your deposit bill has increased so that you can budget your finances accordingly.
Housing crisis and the increase of rents
You also may have noticed there’s been a considerable increase in rents and prices of apartments for purchase. This is due to the housing crisis.
The housing crisis in Czechia is another significant reason for the inflation. This crisis has been caused by several factors:
- Not enough construction and vacancies, mainly caused by expensive building materials and complicated bureaucracy
- High demand for purchasing property, which causes a rise in property prices, which causes the necessity to live in rentals, which once again increases the demand, which increases rents
- People are panicking and enquiring about several flats at the same time → this artificially increases demand even further, which leads to higher prices
- So-called “speculators” are purchasing properties without renting them out or reconstructing them, which contributes to the shortage of vacant apartments
Keep calm and carry on
To deal with this situation the best you can, we recommend that you keep a closer eye on your household budgets. Another good idea is to visit a financial advisor to make sure you are using your money wisely.
When looking for an apartment, make sure you know what you want ahead of time (sit down and write a checklist) and then enquire about them one by one as opposed to inquiring about several at the same time. This way you won’t be affecting the prices artificially.
Most importantly, try not to panic. Inflation is currently happening all over the world. In other words, we’re all in this together.
If you’re worried about talking to your landlord, you can use our assistance services and have us help you. In the meantime, try out some of our tips to save electricity and subscribe to our newsletter to keep updated on the situation.
Photo source: Karolina Grabowska from Pexels