Impacts of Inflation 2019 –2024 on Household Consumer Behavior in the Czech Republic
Impacts of Inflation 2019 –2024 on Household Consumer Behavior in the Czech Republic

Summary/Abstract: This article analyzes the impact of the elevated-inflation period between 2019 and 2024 on Czech household consumption. The study utilizes annual data from the Czech Statistical Office (CZSO) on household final consumption expenditure per capita, categorized by COICOP, along with data on average annual inflation rates. Nominal expenditures are deflated using the Consumer Price Index (CPI) with 2019 as the base year (2019 = 100). The analysis focuses on both the level and structure of real expenditures, distinguishing between essential and non-essential consumption categories. The findings indicate that elevated inflation in 2022–2023 led to a temporary decline in real household consumption. Real total expenditure per capita fell below 2019 levels in both 2020 and 2022, returning to pre-crisis level only in 2024. These trends in real consumption were accompanied by significant shifts in the money supply: while 2020–2021 saw a sharp accumulation of liquidity (M1 aggregate), 2022 was characterized by negative M1 growth. The divergence between M1 and the broader M3 aggregate reflects a reallocation of household savings from current accounts to interest-bearing deposits in response to tightening monetary policy. Furthermore, the share of expenditure on housing, water, energy, and fuels increased from approximately 24% to 26%, indicating that these items now constitute a larger portion of household budgets. Overall, the findings suggest that high inflation reduces real consumption and shifts household budgets toward essential goods and services at the expense of discretionary expenditure.

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