Further statistical inquiry confirms that the two series are cointegrated, showing strong long-term common dynamics. Granger causality exploration clearly confirms that changes in imputed rents precede and can predict changes in equipment and maintenance prices. These two time series simply show a textbook case for this type of strong relationship that would definitely be worth including in econometric exercises. Moreover, there is a straightforward economic reasoning to the relationship: you build more and acquire more properties during a booming housing market, you buy more equipment and request more maintenance, and prices of both rise as demand exceeds supply, at least temporarily. Ergo, the likelihood of even more potent core inflation than in our projection is not negligible.
In any case, we reiterate our two pro-inflationary alternative scenarios: (i) a surge in the Czech property market that fuels core inflation, and (ii) a German economic rebound driven by fiscal stimulus, generating positive spillovers for Czech growth, the labour market, and wage dynamics. While both remain alternative scenarios, it is often prudent to keep a range of possibilities in view.