Inflation in February Highest in Four Years

Total Croatia News

Inflation rate has reached 1.4 percent.

In February, consumer prices in Croatia rose by 1.4 percent year-on-year, which is their biggest increase since August 2013. The highest increase was recorded in sectors of petrol, restaurants, hotels, food and drinks, reports on March 16, 2017.

The Central Bureau of Statistics published the latest data on Thursday and confirmed that Croatia, after three years, has exited the deflationary period, given that consumer prices in February rose for the third month in a row, and faster than the month before, when they grew by 0.9 percent.

The growth rate of 1.4 percent year-on-year is the largest since August 2013, when prices increased by 1.9 percent. “In addition to the base effect – in February last year, consumer prices recorded a fall of 1.4 percent year-on-year – rising inflation in February was aided by the increase in prices of transportation, especially fuels for cars”, said analysts of Raiffeisenbank Austria (RBA) who reviewed the report.

The highest growth in February was recorded for transportation prices, which grew by 7.3 percent, including the price of fuel, which rose by 16.3 percent. They were followed by prices in restaurants and hotels (3.8 percent). Prices in the health sector increased by 2.1 percent, while prices in recreation and culture sector rose by 1.2 percent.

On the other hand, prices of housing, water, electricity and gas declined by 4.4 percent, which largely reflected lower gas prices by 11.2 percent. They were followed by prices of communication services (2.7 percent).

In the first two months of this year, consumer prices rose by 1.1 percent compared to the same period last year.

“In the coming months, we expect continued positive inflation rate. Higher prices will be a consequence of the strengthening of imported inflationary pressures, primarily from the commodity markets of crude oil and raw foods. Also, higher prices will be a result of higher VAT rates on certain services, and also of excise taxes”, said RBA analysts.

They believe that wage growth and expectations of a strengthening of domestic demand should not have a significant impact on inflation, due to the still weak labour market and the fact that spending is mostly focused on subsistence goods.

RBA analysts expect that the average increase in consumer prices this year could amount to 1.9 percent. If these estimates are confirmed, that would be the first year of inflation after three years of falling prices. Last year, consumer prices fell by 1.1 percent, significantly more than in the previous two years. In 2015, prices on average fell by 0.5 percent, and in 2014 by 0.2 percent.


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