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With the creation of EMU (Economic and Monetary Union), new economic conditions were also created. Before entering the euro area, the EU (European Union) member states must fulfill the convergence criteria (or “Maastricht convergence criteria”), which are based on economic indicators and they must continue to respect them once entered. One of the criteria is the price stability and height of the inflation rate. Together with the creation of a new economy, the topic of examining inflation persistence has become actual, particularly over the past decades. Inflation persistence is one of the most important parameters influencing the conduct of monetary policy. The central bank is interested in the degree of inflation persistence to improve inflation forecasting and reliably estimate the dynamic responses of inflation to shocks. The persistence of inflation is known to have a strong impact on monetary policy. If there is considerable inertia in inflation, then inflation shocks take a long-lasting nature and make it difficult for the central bank to control it.

The study of deflation seems to be gaining ever more importance. Central banks in most advanced economies, including the European Central Bank and the Czech National Bank, have observed CPI inflation running below their targets or even in outright deflationary territory. These central banks argue that deflation should be avoided at all costs and employ extraordinary policies such as quantitative easing, foreign exchange interventions or negative nominal interest rates to fight against it. As these policies have not always led to higher economic growth and higher inflation, there have been calls for even more extraordinary measures.