Annual inflation rate in July 2.3 percent

Prices of goods and services for personal consumption, measured by the consumer price index, in Croatia were on average 0.6 percent lower in July compared to June, while on an annual basis, compared to last July, they are 2.3 percent higher, the Croatian Bureau of Statistics announced today.

On an annual average, however, prices of goods and services for personal consumption, measured by the consumer price index, are 3.8 percent higher.

The July inflation rate on an annual basis of 2.3 percent is slightly higher than in June when it was 2 percent, while in May the lowest level since February 2012 was recorded at 1.6 percent.

By main groups according to consumption purpose on a monthly basis, in July compared to June, the prices of clothing and footwear fell the most, which, due to seasonal discounts, were on average 9.6 percent lower.

Prices of food and non-alcoholic beverages were on average 1.6 percent lower (lower prices of fresh fruits and vegetables), household goods, household equipment, and regular maintenance 0.4 percent, education 0.2 percent, while prices of transport and communications were on average lower by 0.1 percent in each group.

At the same time, in July compared to June, prices of alcoholic beverages and tobacco were on average 6.0 percent higher (increase in tobacco prices), recreation and culture 1.1 percent, catering services 0.5 percent, other goods and services 0.3 percent, while prices of housing, water, energy, gas, and other fuels were on average 0.1 percent higher on a monthly basis. Healthcare prices in July remained on the level from June on average.

Within the consumer price index, prices of goods in July compared to June were on average 0.9 percent lower, while prices of services were on average 0.3 percent higher.

On an annual basis, however, out of 12 main groups according to consumption purpose, price increases were recorded in nine of them, while three saw a decline.

In July this year compared to the same month last year, the prices of alcoholic beverages and tobacco rose the most, by 12.6 percent, primarily due to an increase in tobacco prices by 15.6 percent.

By main consumption groups in terms of annual price increases, food and non-alcoholic beverages follow with an increase of 4.3 percent, with food increasing by 4.6 percent.

The largest increase in this group was recorded for milk, cheese, and eggs by 12.8 percent, prices of fruits are 7.6 percent higher on an annual basis, fish by 5 percent, oils and fats by 4.9 percent, and bread and cereals by 3.6 percent.

On an annual basis, in July this year compared to the same month last year, prices of housing, water, energy, gas, and other fuels are also higher by 2.4 percent, catering services by 1.7 percent, other goods and services by 1.4 percent, and transport by 0.9 percent.

Moderate growth is recorded in prices of recreation and culture by 0.3 percent and education and healthcare by 0.1 percent each.

A decline in prices on an annual basis in July is recorded for communication prices by 3.5 percent, clothing and footwear by 2.1 percent, and household goods by 0.1 percent.

The annual growth of consumer prices in July of 2.3 percent is a slightly stronger increase than in June (2.0 percent), but inflationary pressures remain relatively weak, say analysts from Raiffeisenbank Austria (RBA).

On a monthly basis, prices are down by 0.6 percent, primarily due to seasonal discounts, while the annual growth of consumer prices was primarily driven by the increase in food prices, although in July the base effect of the price increase of fruits and vegetables during July last year was partially mitigated.

Analysts from RBA note that “annual rates of growth in consumer prices since the beginning of the crisis show that stronger inflationary pressures have largely been generated by the increase in administratively determined prices, i.e., rising costs, while the stimulus for price increases due to recovery and demand growth is absent.”

In the coming months, they expect relatively low inflation rates to be maintained, although the increase in excise duties on fuels should affect the consumer price index.

“Without economic recovery, there are no pressures for price increases, and on the other hand, with the entry into the European Union, there should also be a decrease in the prices of certain products and services, such as communication services,” assess RBA analysts.