Annual inflation rate in December slowed to 2.9 percent

The annual inflation rate in Croatia has been slowing for the fifth consecutive month, standing at 2.9 percent in December 2008 compared to the same month in 2007, marking the lowest level in the past year.

According to data released today by the Croatian Bureau of Statistics, the prices of goods and services used for personal consumption, measured by the consumer price index, were on average 0.6 percent lower in December last year compared to November. On an annual basis, compared to December 2007, they were 2.9 percent higher, while on average for the year, they were 6.1 percent higher. Thus, December recorded a further slowdown in the annual inflation rate – from a record 8.4 percent in July 2008, the inflation rate slowed to 7.4 percent in August, 6.4 percent in September, 5.9 percent in October, and 4.7 percent in November. In December, the annual inflation rate was the lowest in 2008, and the lowest since August 2007, when it was at 2.6 percent.

According to DZS data, the largest contribution to the decrease in the consumer price index in December 2008 compared to November came from the prices of clothing and footwear (down 0.50 percent) and transport (down 0.39 percent), while the largest contribution to the increase came from food and non-alcoholic beverages (up 0.29 percent). Specifically, when observed by major groups according to consumption purpose, in December 2008 compared to November, clothing and footwear prices were down 6 percent due to seasonal discounts, while transport prices decreased by 3.4 percent due to lower fuel prices. Additionally, prices for housing, water, energy, gas, and other fuels were down 0.2 percent due to lower prices of liquid fuels, and communication prices were down 0.1 percent in December compared to November.

At the same time, an increase was recorded in the prices of food and non-alcoholic beverages – up 0.9 percent, catering services (up 0.5 percent), other goods and services (up 0.3 percent), and healthcare (up 0.1 percent). Prices for alcoholic beverages and tobacco, furniture, household equipment and regular maintenance, recreation and culture, and education remained at the November 2008 level. On an annual basis, in December 2008 compared to the same month of the previous year, food prices increased by 5 percent, with the highest increases being for bread and cereals at 12.2 percent, and meat at 8.1 percent.

Above-average annual increases were also recorded in healthcare prices, up 7.6 percent, catering services up 7 percent, and prices for housing, water, energy, gas, and other fuels up 6.5 percent. The annual growth in fuel and energy prices in December was 5.8 percent, with electricity prices increasing by 16.1 percent, while liquid fuel prices showed a decrease of 20 percent. A decline in prices on an annual basis was recorded in December 2008 compared to the same month in 2007, with clothing and footwear prices down 1.1 percent, communication prices down 1.8 percent, and transport prices down 5.5 percent, with a 15 percent decrease recorded in fuel and lubricants for personal vehicles. (H)