Record Decline in Consumer Prices in February

In February, transportation prices fell the most on an annual basis, by 4.4%, with fuel prices for transportation vehicles plummeting by 7%. Following were food and non-alcoholic beverage prices, clothing and footwear, as well as housing, water, electricity, and gas prices, which decreased by 1.5%, while education prices slid by 0.9%.

In Croatia, consumer prices fell by a record 1.4% in February compared to the same month last year, primarily due to a sharp decline in fuel prices, according to a report from the Croatian Bureau of Statistics. Data released by the CBS on Thursday indicate a continuation of deflationary pressures, as consumer prices have stagnated or declined for two years. In February, the annual price decline was significantly greater than the previous month, when prices fell by 0.8%. A 1.4% decline in consumer prices has not been recorded since 2000, when the CBS began tracking these data.

– This continues the trend of deflationary pressures, which has been ongoing with sporadic interruptions since February 2014. This is also the strongest annual decline since the CBS has been monitoring the consumer price index, analysts from Raiffeisenbank Austria (RBA) noted in their commentary on the CBS report.

In February, transportation prices fell the most on an annual basis, by 4.4%, with fuel prices for transportation vehicles plummeting by 7%. Following were food and non-alcoholic beverage prices, clothing and footwear, as well as housing, water, electricity, and gas prices, which decreased by 1.5%, while education prices slid by 0.9%. Recreation and culture prices fell by 0.6% on an annual basis, while communication prices slid by 0.4%, and household goods and equipment prices fell by 0.3%.

On the other hand, health prices rose the most on an annual basis, by 1.8%, followed by alcoholic beverage and tobacco prices, which increased by 1.2%. Restaurant and hotel prices, however, rose by 0.6%.

– Excluding volatile components (energy and food prices) from the consumer price index, the core annual inflation rate in February recorded stagnation, RBA analysts noted.

On a monthly basis, prices also fell in February, by 0.3%. The largest decline was in clothing and footwear prices, which fell by 1.9% due to seasonal discounts, while transportation prices, which include fuel prices, fell by 1.6% in February compared to January. Thus, the deflation period has entered its third year, as consumer prices on average fell by 0.5% last year, and by 0.2% in 2014.

– We expect negative inflation rates to continue throughout the year, with only towards the end of the year, due to the expected rise in crude oil prices, we might see a slight intensification of inflationary pressures. We expect 2016 to be another year marked by the absence of inflationary pressures, conclude RBA analysts.