The Czech National Bank has published a research brief assessing how demographic change affects inflation, interest rates and monetary policy through labor supply, aggregate demand, saving behavior and fiscal balances. For Czechia, it finds that population ageing and low fertility may increase inflationary pressures while reducing the neutral real interest rate, leaving the appropriate monetary policy response dependent on the relative strength of these effects. People aged 65 or older accounted for almost 21% of Czechia’s 10.9 million population at the end of 2025, with the share projected to reach about 29% by mid-century. The fertility rate fell to 1.28 children per woman in 2025, and the working-age population is expected to decline as large cohorts approach retirement over the next 10 to 15 years. This could intensify labor shortages, wage pressures and services inflation unless offset by immigration, later retirement, higher labor force participation or stronger productivity growth. The brief also examines the arrival of about 440,000 Ukrainian refugees following the outbreak of war in 2022. The average share of Ukrainian employees rose by nearly 3 percentage points and has remained close to 5%, while their wage gap with non-Ukrainian employees has persisted, largely reflecting occupational and sectoral employment patterns.
2026-08-25Czech National Bank
Czech National Bank finds ageing may raise inflation while lowering the neutral real interest rate
The Czech National Bank finds that ageing and low fertility may strengthen inflationary pressures in Czechia while lowering the neutral real interest rate. A decline in the working-age population could intensify labor shortages and wage pressures over the next 10 to 15 years. Ukrainian workers have increased labor supply since 2022, although their wage gap with non-Ukrainian employees persists.