Industrial Product Producer Prices Increased by 7.8 Percent, Highest Growth Since October 2012

Industrial product producer prices in the domestic market increased by 7.8 percent in June this year compared to June last year, marking their highest growth since October 2012.

According to the latest data from the Croatian Bureau of Statistics, industrial product producer prices in the domestic market rose by 1.1 percent in June this year compared to May and by 7.8 percent compared to June last year.

In the foreign market, however, these prices increased by 0.5 percent on a monthly basis and by 6.5 percent on an annual basis.

The 7.8 percent increase is the highest since October 2012 and is primarily due to the rise in energy prices, which are 25.3 percent higher compared to June 2020, analysts at RBA noted in their weekly commentary.

They added that other product categories recorded significantly milder growth, with intermediate products leading the way with a growth of 3.4 percent.

Prices of durable goods for general consumption increased by two percent on an annual basis, while capital goods rose by 1.6 percent. Producer prices of non-durable goods for general consumption remained stable, according to DZS data.

On a monthly basis, by main industrial groupings, in June, producer prices in the domestic market increased in energy by 2.8 percent, in durable goods for general consumption by 0.8 percent, in capital goods by 0.6 percent, and in non-durable goods for general consumption by 0.4 percent.

At the same time, producer prices for intermediate products fell by 0.1 percent.

At the end of the week, consumer price data

The producer price data serves as an introduction to the upcoming consumer price announcement for June, scheduled for the end of the week.

The inflation rate measured by the consumer price index in May was 2.1 percent on an annual basis, the same as in April, marking the highest price growth rate since August 2018.

At RBA, they estimate that the consumer price announcement for June will show a slight slowdown in the annual inflation rate compared to the previous two months, confirming that there is no clear increase in consumer prices, although, they note, it is customary for a certain lag in the spillover from producer to consumer prices to occur.

– The rise in consumer price inflation, according to current expectations, is of a temporary nature and will certainly remain around 2 percent in the second half of the year. However, such rates are still far above the average of the last eight years, which was around half a percent. Consequently, the average annual inflation rate for Croatia in 2021 is expected to be 1.8 percent – RBA states.

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