...expectations of flat interest rates in the coming few months.
The consumer price index (CPI), the broad gauge of inflation, rose 0.2 percent month-on-month and 1.7 percent year-on-year , a touch faster than analysts had forecast, data showed on Tuesday.
The median forecast in a Reuters poll of 12 economists was for the CPI to hold flat month-on-month and rise 1.6 percent year-on-year from 1.5 percent in November and a near 1-1/2-year low of 1.3 percent in October.
Despite the uptick, the annual inflation rate was the lowest for the month of December since 2003 and remained below the central bank's inflation goal, which has a tolerance range of one percentage point either side of the 3 percent mid-point.
Analysts said consumer price growth in late 2006 lagged the central bank's forecast, giving policymakers no reason to rush to tighten policy further after 75 basis points worth of hikes between October 2005 and September 2006.
Low inflation, a sharp rise in the crown to record highs in late 2006 and policymakers' recent dovish comments have led markets to bet that the central bank might delay any further interest rate hike beyond March.
"The important thing is that the adjusted inflation, without fuels, which the central bank watches, remains very low and gives little chance of an interest rate increase already this month," said David Marek, chief analyst at Patria Finance.
"Given the crown's exchange rate and its tightening effect, a rate hike may not even come in April as we had expected."
The Czech economy has benefited from both low inflation and an export boom to sustain a healthy growth rate, with its foreign trade balance improving over a year ago for the fourth month running in November, separate data showed on Tuesday.
The trade balance posted a 6.43 billion crown ($303.2 million) surplus in November on highest export and import volumes on record, beating even the most optimistic forecast of a 6 billion surplus in a Reuters poll among 12 analysts.
((For INSTANT VIEWS on December inflation and November trade data, double click on the following codes in brackets: [ID:nL09302249] [ID:nL09174055]))
[PRAGUE/Reuters/Finance.cz]