Consumer confidence in Czechia hits historic low

A man pushes his wheelchair across an empty Old Town square. (AP Photo/Petr David Josek)
By M B
6 Min Read

Consumer confidence in the Czech economy has fallen to its lowest level on record, according to the latest survey conducted by the Czech Statistical Office.

A record number of respondents fear a worsening of their financial situation, and “the number of consumers who assess their situation as worse than in the last 12 months is also close to a historic high,” the statisticians reported.

The confidence and hope with which we think about the future affects that future to a great extent. That mood has a significant influence on how we make decisions. If we have faith in the future, we have dreams and courage. Alternatively, on the contrary, we can fall into pessimism about the months and years to come. Expectations determine how we live, and this is why the public’s current mood is monitored very carefully by various surveys.

A storm of more bad news follows as industrialists and businesses have a similar negative outlook on the future.

“Household pessimism has been growing for the fifth month in a row. Consumer confidence in the economy reached the lowest value in the survey’s history in July. Consumers believe that their current financial situation, as well as the overall economic situation in the Czech Republic, is deteriorating and that this negative trend will continue in the coming months.”

Czech Statistical Office

For those who watch what is happening around them, it is difficult to avoid similar moods. People see sharp price increases around them, but nowhere do they get an answer as to when and how it will end.

The first news that one sees in the morning after going online is that thousands are speculating about whether or not Russia will turn off the gas and many musings about the severe winter. Then comes the news that the price of electricity will continue to rise.

In such a rich and advanced society as the European Union, including the Czech Republic, there is suddenly a serious debate about whether or not people will be able to cover their basic needs, like a sufficiently heated house or apartment. We are discussing reducing energy consumption and considering how to cook, wash, and live more economically. Regression.

All this is an example of obvious decay. European society has reached a dead end. The idea that people will give up basic needs like a warm home and feel happy doing so is illusory. Humans are naturally set on improving their lives. Society thrives, and people feel good about when they believe their children will have a better life than they did.

The government and the Czech National Bank must act

Unfortunately, the Czech Republic has, in recent months, resembled a car going through difficult times without a driver. Petr Fiala’s government, unlike others in Europe, has been unable to tame electricity prices, which have gotten completely out of control due to distorted regulation. And there is no solution in sight. Instead, the government is patching holes with social benefits such as the austerity tariff, which only deepens the national debt.

The Central Bank and its new governor, Aleš Michl, seem even more confused. So far, the governor has not even bothered to publicly say what he plans to do with one of the highest inflation rates in the European Union. We only know that the primary tool the bank has to tame inflation is interest rates, and Aleš Michl will not raise them. And he probably has the majority of the bank board on his side.

In her first public appearance, the new vice-governor, Eva Zamrazilová, warned people not to ask for higher salaries, because otherwise, the bank will have to raise interest rates. In other words, she told them to accept that they are becoming poorer instead of showing a plan of what she will do to fight inflation.

The helpless watching and defeatism of the political and financial elite is extremely dangerous. Prime Minister Petr Fiala should tell people soon how his government will deal with the rapidly rising electricity prices. He can’t do anything about the gas and oil we import. However, the intervention in electricity is in his hands.

Central bankers should then clearly say how and when they will tame the worst inflation in the history of the Czech Republic. The excuse that it is necessary to wait for the rise in prices to stop by itself will only deepen mistrust and pessimism.

It’s high time for Petr Fiala and Aleš Michl to sit behind the wheel, start making decisions, and drive, and to show pessimistic Czechs the light at the end of the crisis tunnel.

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