The price level in the Czech Republic rose during the 20 years of its membership in the European Union, i.e. between 2004 and 2024, by 29 percentage points to 84 percent of the EU average. It has increased by three points in the last two years. This follows from the analysis that Helena Horská, Raiffeisenbank’s chief analyst, presented to journalists today.
According to her, the price level of private household expenses is almost 90 percent of the EU average. On the contrary, the price level of the services that the government provides to Czech citizens in education, healthcare or state administration or consumes itself did not even reach three-quarters of the European level. “In other words, the relative price level of services provided by the state is still relatively low. The Czech state provides its citizens with these services at very low prices,” she pointed out.
According to her, the prices of food and non-alcoholic beverages have risen almost to the average European level, the second highest after Slovakia among the countries of the Visegrád Four (V4), which brings together the Czech Republic, Hungary, Poland and Slovakia. Residential real estate has not yet reached the price average in the EU, but has become the most expensive in the region. Housing costs have reached 78 percent of the EU average due to rising rents and utilities.
According to Horská, in the twenty years since the Czech Republic joined the EU, the standard of living measured by gross domestic product (GDP) per inhabitant has increased from 81 to 91 percent of the EU average. Of all the countries that joined the union in 2004, only Malta and Cyprus achieve higher values, and of the V4 countries, the Czech Republic is significantly closer to the EU average. In Hungary it is 76 percent, in Poland 80 percent and in Slovakia 73 percent. But the shift is considerably higher for these countries, almost 30 points for Poland, the analyst pointed out.
Although the Czech economy is significantly approaching the economic level of the EU, many regions tend to resist convergence, Horská pointed out. Above-average growth, by 130 percent, was recorded by the South Moravian region and Prague by 120 percent. Conversely, the Karlovy Vary region is approaching the slowest with growth of 61 percent and South Bohemia with growth of 80 percent.
With its economic level, the capital city moves away from other regions and increases the average of the entire republic. However, according to Horská, the South Moravian Region, which includes Brno, recorded a dynamic development, the reason for which may be the increase in the shares of the service and trade sector, especially electrotechnical and IT, and the significant allocation of European funds to support universities, science and research.
Source: Reuters, ČTK
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