There are numerous small shops in the city center of Prague that live out of tourists and charge extra for simple products such as water bottles, soft and alcohol drinks. Since tourists are usually unfamiliar with the city, they end up overpaying, for example for a water bottle in some cases even more than ten times over.
During summer periods, Prague tends to be really hot. This fact is very familiar to owners of small businesses in the city center that tend to charge up to 70 CZK (≈2.6€, 2.85$) for a small bottle of water. Since tourists tend to walk on usual routes, there is a huge number of small businesses that choose to sell water bottles, soft drinks, alcohol and cigarettes right here. These prices are definitely not normal, even if you are not traveling on a budget. There is no reason why anyone should rip you off just because you are a tourist and not that familiar with the city and its currency.
In the historical center there are a few large supermarkets where you can buy everything you need at very affordable prices. However, some supermarkets tend to charge a premium price for bottles that are 0.5l and 1.5l (around 12-14 CZK) because tourists usually buy these bottles which are easier to carry. You will definitely find the lowest prices at Lidl and Albert supermarkets (a bottle of water is around 4CZK).
Other tactic that you may find useful is to buy soft drinks and water bottles at metro stations. Since tourists tend to do sightseeing on foot, most of the shops that live out of tourists are above the ground. When you enter the metro station you will notice a large drop in prices.