Consumer prices in Croatia rose by 12.1 percent in June compared to the same month last year, which is the highest inflation rate since the Croatian Bureau of Statistics (CBS) has been keeping these data, and is mostly a consequence of rising fuel and food prices.
The prices of goods and services for personal consumption, measured by the consumer price index, rose by 1.1 percent in June compared to May, while they jumped by 12.1 percent compared to June last year, according to the CBS report published on Friday.
The price growth of 12.1 percent represents a significant acceleration compared to May, when prices rose by 10.8 percent.
The annual rate of consumer price inflation continued to accelerate during June and, after reaching double-digit values in May, reached a historically high 12.1 percent in June. Average growth in consumer prices in the first half of 2022 amounted to 8.6 percent, according to Raiffeisenbank Austria (RBA) analysts in reference to the CBS report.
Observed according to the main groups of the ECOICOP classification, at the annual level, the largest increase in consumer prices on average was recorded in the transport group, by 20.3 percent, and food and non-alcoholic beverages, by 16.9 percent.
Prices in restaurants and hotels rose by an average of 14.6 percent on an annual basis. With a growth of 13 percent, they are followed by prices of furniture, home equipment and regular household maintenance, while the prices of clothing and footwear increased by 11.1 percent.
The prices of housing, water, electricity, gas and other fuels increased by 9.6 percent, and recreation and culture by 8 percent.
Elevated inflation rates are expected in the third quarter as well
Although growth is still led by energy and food, the contribution of other components of the consumer goods basket is noticeable, so the core inflation rate, which excludes food and energy prices, rose to 7.1 percent annually in June, according to RBA analysts.
They recall that with its interventions, the Government also prevented a stronger growth of oil derivatives and the costs of housing, gas and electricity.
And while energy and food reflect movements on the global commodity markets, the growth of other components is a consequence of rising costs and the spillover of strong price increases from producers to end consumers. Furthermore, it also increases the pressure on price growth in the service sector, which faces increased demand after the recovery from the crisis caused by the covid-19 pandemic, but also the fact that increased tourist consumption creates pressure on the demand side, according to the analysis.
RBA analysts expect elevated and even stronger double-digit growth rates to persist in the third quarter, while only a certain calming down could be recorded as the end of the year approaches.
The latter will be mainly due to the effect of the base period and, to a lesser extent, the slowdown in economic activity. Namely, we do not expect energy and food prices to fall, but only to slow down and possibly calm down at the currently elevated levels. Therefore, according to our estimate, in 2022, Croatia will record the highest inflation rate in its recent history, RBA analysts conclude.
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