According to the regular monthly survey of the Czech Statistical Office (CZSO), the mood of domestic consumers fell in July to the lowest level in the entire history of the measurement, which has been recorded since 2003. Czechs spend less than a year ago for all basic types of goods and services, with the exception of often essential drugstore and pharmacy goods.
The fear of the economic future of the Czechs is higher now than at any time during the pandemic, and even at any time than during the global financial crisis of 2008 and 2009, the subsequent European debt crisis and the related recessions in the Czech Republic at the time. For the whole of this year, retail sales will therefore fall by 2.2 percent in real terms.
A record number of respondents to this year’s July survey by the CZSO stated that they fear a worsening of their own financial situation. The number of consumers who assess their financial situation worse than in the previous twelve months is also close to its historical maximum.
At the same time, the most painful blow is usually still ahead of domestic consumers, it awaits them in autumn and winter, when the prices of energy and therefore everything else will rise further. Inflation will probably rise above the level of 20 percent. At the same time, many households will be caught up with mortgage fixations, which have meanwhile also risen in price to the highest level since the turn of the millennium.
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At the same time, according to the CVVM survey, the results of which were published at the end of last week, only 28 percent of the Czech population trusts the government of Petr Fiala. The previous Babiš government had such low trust only temporarily, for a single month, namely in June 2021, when the population’s frustration with another covid wave peaked.
However, the extreme distrust in Fial’s government has a deeper reason, and that is because it is an economic reason, the solution of which is not yet in sight. It can therefore be assumed that confidence in Fial’s government will fall significantly below the lowest level since Babiš’s government in the coming months.
The author is Trinity Bank’s Chief Economist and a member of the Government’s National Economic Council (NERV)
(Editorially modified)
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