Czech government earmarks $7.1 billion to ease inflation, energy price shock

PRAGUE (Reuters) -The Czech government on Wednesday approved final plans for a discount electricity rate subsidised by the state, part of measures costing a total of 177 billion crowns ($7.12 billion) to ease the burden of soaring energy bills and inflation.

The new reduced energy tariff will help households already from October and provide an average level of support of 15,000 crowns ($604), including 4,000 crowns already this year, government officials said.

With energy markets hitting record highs in the wake of Russia's invasion of Ukraine and the war there that is now a half-year old, European governments have scrambled to provide help to households and firms to handle utility bills that are rising severalfold.

The energy tariff is aimed at households and is the most expensive measure that the government has so far taken.

"The government has set aside 177 billion crowns in total... the government brings measures which are targeted, in different volumes and for various groups of people," Prime Minister Petr Fiala said after a government meeting on Wednesday.

The total help, equal to 2.9% of 2021 gross domestic product, also includes pension hikes, a one-off child benefit payments, or a waiver on renewable energy payments for households among action taken to help people handle soaring prices.

Inflation in the Czech Republic is at a three-decade high of 17.5%, and could be approaching 20% in the coming months, according to central bank and the Finance Ministry forecasts.

($1 = 24.8180 Czech crowns)

(Reporting by Robert Muller; Writing by Jason Hovet; Editing by Angus MacSwan)