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UPDATE 1 - Croatia's July annual inflation overshoots Erste analysts' expectations

Author Iskra Pavlova
UPDATE 1 - Croatia's July annual inflation overshoots Erste analysts' expectations Photo:

ZAGREB (Croatia), August 16 (SeeNews) - Croatia's consumer prices rose by 1.1% year-on-year in July, increasing more than analysts at Austria-based Erste banking group had expected, Erste said on Friday. 

July headline inflation has overshoot Erste's expectations of milder growth of 0.6%, the group said in an instant comment after the country's statistical office published the July inflation data earlier on Friday.

In June, Croatia's annual consumer price inflation was 0.6%.

However, Erste analysts said inflation in Croatia is still well contained, adding they see average inflation around 1% in 2019.

"We don’t see any major changes going forward as demand-side pressures seem well contained, notwithstanding strong consumption trend, while the supply side remains mostly sensitive to energy prices, which for the time being look comfortable," the analysts said.

Later in the year, with the start of the heating season, energy prices might exercise some upside pressure on inflation due to a 6.9% gas price hike for households as of April, Erste noted.

The analysts also said that monthly drop of 0.5% in Croatia's consumer prices in July was backed by a 11.5% decrease in clothing and footwear prices amid the usual sales season, as well as by lower transport prices.

The statistical office data showed that prices of food and non-alcoholic beverages, which have the largest weight of 27.81% in the consumer basket, rose 0.3% year-on-year in July, after dropping by the same percentage in June.

Prices of housing, water, electricity, gas, and other fuels, with a 16.44% weight, added 3.9% in July - the same annual rate of increase as in June. Prices of transport services, which have a 12.43% weight, however, decreased by 1.1% in July, following a drop of 1.4% in the previous month.

Croatia's average annual inflation accelerated to 1.5% last year, from 1.1% in 2017.