Study of the causes of inflation in the Czech Republic in 2022-2023 and measures to mitigate it

This bachelor’s thesis deals with the high inflation that affected not only the Czech Republic but also other European countries. The aim of the thesis is to identify the key factors behind the rise in prices in the Czech Republic between 2022 and 2023 and to assess the timing, intensity, and effectiveness of the measures taken by the Czech National Bank and the Government of the Czech Republic to mitigate it. The thesis uses a combination of analysis and synthesis, comparison, and an evaluation of macroeconomic indicators. The analysis is based on official data from the Czech Statistical Office, the Czech National Bank, and Eurostat, and draws on relevant academic literature. The results show that inflation was caused by a combination of several factors. The post-pandemic recovery, together with initially very loose monetary and fiscal policies, followed by the shock triggered by the war in Ukraine and the energy crisis, contributed to the rise in prices. The rapid increase in interest rates implemented by the CNB as one of the first central banks, the use of foreign exchange reserves to strengthen the Czech koruna, the introduction of price caps on electricity and gas, and the subsequent fiscal consolidation effectively dampened inflation. Thanks to these measures, inflation subsequently returned to the tolerance band of the CNB’s inflation target.