Friday, 17 September 2021

Croatia's August Inflation Rate Picks Up to 3.1%, Highest Since April 2013

ZAGREB, 17 Sept 2021 - Consumer prices in Croatia rose by 3.1% in August 2021 compared with the same month in 2020, which is the highest inflation rate since April 2013, when it was 3.3%, according to figures released by the National Bureau of Statistics (DZS) on Friday.

The first stronger rise in inflation was recorded in April this year, of 2.1%. It slowed down to 2.0% in June, before picking up to 2.8% in July and 3.1% in August.

The rise is the result of the spillover of prices from global commodities markets, growing domestic and foreign demand, and a price convergence towards the EU average, notably with regard to services, analysts at Raiffeisenbank Austria (RBA) said in their comment on the DZS report.

The rise in consumer prices accompanied the rise in industrial producer prices, which grew by 9.3% in August 2021 compared with August 2020, their highest jump since January 2011. This year industrial producer prices increased by 3.5% in March, 5.8% in April, 7.6% in May, 7.2% in June and 7.9% in July.

Transport prices increased the most, by 9.9% compared with August 2020.

Compared with July 2021, consumer prices went up by 0.2% on average.

In the first eight months of 2021, compared with the same period of 2020, consumer prices rose by 1.7%. The greatest contribution to the rise came from energy prices, which increased by 5.2% on average. At the same time, consumer prices excluding energy rose by 1.0%.

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Saturday, 7 August 2021

Croatian Food Prices Rise, Some Products 100% More Expensive

August the 7th, 2021 - Croatian food prices have been steadily rising, and some footstuffs and ingredients that everyone regularly purchases and has in the kitchen cupboards have risen by a staggering 100 percent.

As Poslovni Dnevnik writes, key foodstuffs and common ingredients such as cereals and oilseeds have risen dramatically of late, and their prices in Croatia are currently 20 to 100 percent higher than they were just one year ago, according to weekly indicators from the Ministry of Agriculture.

Given that cereals and oils are an integral part of many food products, experts fear that the jump in their prices in the autumn will trigger a number of subsequent jumps in Croatian food prices in many stores, which has the potential to jeopardise the living standards of the country's residents.

For example, in the week ending on August the 1st, one kilogram of wholesale wheat cost 1.4 kuna, which is 21 percent more than at the end of July last year. Corn is currently being sold for 1.63 kuna per kilogram, which means that it is 42 percent more expensive than it was just 12 months ago.

This is the highest wholesale price of corn recorded in Croatia in the last seven years, Tugomir Majdak, state secretary at the Ministry of Agriculture, recently noted.

The price of barley jumped 28 percent. Sunflower seed meal, which sold for 2.8 kuna per kilogram in the spring, has actually become cheaper in recent weeks, but it is still 27.5 percent more expensive than it was last year. The price of soybeans increased by about 100 percent in a year, while rapeseed oil rose by 53 percent at the same time, Novi list writes.

Consumers were surprised when they recently noticed the price of a liter of oil had jumped from 11 to 16 kuna overnight, signalling legitimate concerns about more Croatian food prices rising, especially as this is one of the main worries people have about Croatia joining the Eurozone.

However, it should be said that other food products have not become significantly more expensive, as it often takes several months for retailers to run out of supplies and to put new, more expensive consignments of food obtained from producers on their store shelves.

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Tuesday, 27 July 2021

Mirjana Cagalj Discusses Potential for Croatian Inflation This Autumn

July the 27th, 2021 - Could Croatian inflation be on the horizon at the end of summer as the weather grows colder and autumn arrives? Mirjana Cagalj, a top figure from the Croatian Chamber of Commerce (HGK) doesn't believe it will come to that.

As Poslovni Dnevnik writes, Mirjana Cagalj, the vice-president of the Croatian Chamber of Commerce, spoke for N1 Studio about the increase in the price of everything in the Republic of Croatia, especially in terms of construction materials.

When asked if inflation awaits Croatia as autumn approaches, Mirjana Cagalj's short answer was a very simple no.

"There are some small indicators of that, but none that are so strong that we could now claim that there will be huge inflation coming," Mirjana Cagalj told N1, emphasising how construction materials have really become more expensive in this country.

"Since back in November, when we monitor price movements, iron, copper and aluminum have risen in price by between 80 and 200 percent. Iron has risen by 150 percent, from 3.8 to 8.6 euros, copper from 2 and a few euros to 4.14 per kilogram, and there was an increase in prices of basic polypropylene products, components for pipes, from 800 to 2200 euros per tonne. No construction project can succeed very easily with prices like that.

This happened due to disruptions in oil prices, reduced production and now high demand. No one could have predicted any of that before the price jump, so those who agreed on deals before are now in trouble,'' warned Cagalj, adding that work is happening on aiding projects faced with these obstacles.

"We're communicating with the government, and we've been getting positive feedback from them. We warned the ministries about the increase in prices, and we received information on how this can be regulated - through the Law on Obligations and the Law on Public Procurement. The current regulations must be respected, but yes, they must be changed in the future,'' said Mirjana Cagalj.

When it comes to the still continuing post-earthquake reconstruction of the City of Zagreb, contractors could also find themselves in hot water as a result of this huge price rise.

"Croatian Waters (Hrvatske vode) reacted quickly in agreement with the regulatory agency and gave instructions on how they plan to regulate prices, and a large number of ongoing projects also need to be regulated alongside that. If construction companies abandon a project, we'll end up with much higher prices in the next tender. It's better to regulate the price of certain things now than to lose a contractor.

When the Reconstruction Act was passed, the state regulated the maximum price. The state won't interfere in public tenders, but it can help, as it helped companies during the coronavirus pandemic. Germany has issued an instruction to companies stating that if they're late with the deadlines due to the procurement of materials, they won't be punished for it, and other European countries have done the same,'' said Cagalj.

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Thursday, 17 June 2021

European Union Annual Inflation Accelerates in May, Highest in Croatia Since Joining EU

ZAGREB, 17 June 2021 - Annual inflation in the European Union and the euro area in May reached its highest level in nearly two and a half years, while consumer prices in Croatia increased the strongest since the country joined the EU, according to a report released on Thursday by the EU statistical office, Eurostat.

The EU inflation rate rose to 2.3% in May, its highest level since October 2018, from 2.0% in April.

In the euro area, the inflation rate was 2.0%, up from 1.6% in April, also its strongest increase since October 2018.

In May 2020, when economic activities and social life virtually came to a standstill due to the COVID-19 pandemic, inflation amounted to 0.6% in the EU  and 0.1% in the euro area.

Croatia alongside Germany, Spain, and Sweden

The highest annual rates were recorded in Hungary (5.3%), Poland (4.6%), and Luxembourg (4.0%).

Croatia ranked alongside Germany, Spain, and Sweden with an annual inflation rate of 2.4%, the highest increase since August 2013. In April the annual inflation rate in Croatia was 2.1%.

In May last year, prices in Croatia fell by 0.7% on the year.

The lowest inflation in May was registered in Portugal and Malta at 0.5% and 0.2% respectively.

The only country to register a decrease in prices was Greece (-1.2%).

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Sunday, 13 June 2021

Croatian Producer Prices Rise by 7.6 Percent, Higher Than ECB Predictions

June the 13th, 2021 - Croatian producer prices have risen by as much as 7.6 percent, quite a significant bit more than the ECB's initial predictions would have suggested.

As Marina Klepo/Novac writes, back in May, Croatian producer prices rose by as much as 7.6 percent when compared to the same month last year, according to the CBS. This is the third month in a row that a significant increase in the price of products supplied by Croatian producers has been recorded; in April, annual prices increased by 5.8 percent, and in March they rose by 3.5 percent.

However, when energy is excluded in that, the prices of industrial products rose by 1.3 percent back in May, which is also mainly related to the growth of raw material prices. This fits in with the dominant interpretations that current inflationary pressures are most affected by rising energy prices and will not have a lasting effect. Manufacturers of furniture (5.3 percent), metals (5.2 percent), tobacco products (4.9 percent) and paper and wood products (4.3 percent) stand out from the activities that significantly increased the cost of production.

The redemption of bonds

How much Croatian producer prices spilled over to those in retail will be known only on June the 16th, when the CBS publishes the data on that. The acceleration of inflation in April to 2.1 percent from 1.2 percent a month earlier, the CNB explains, "was largely the result of an increase in the annual growth rate of energy prices, due to the positive base effect of the period."

Here in Croatia, as it has been in most of the world, a higher inflation rate is expected than previously thought. The first Eurostat data show that consumer prices in the Eurozone rose by 2 percent in May, with the highest occurring in Luxembourg, where they increased by 4 percent, and then in Germany, for example, where they increased by 2.4 percent.

At a recently held meeting, the ECB released its brand new economic forecasts, including an upward revision of inflation, but President Christine Lagarde stressed the temporary nature of these inflationary pressures, as well as the continuation of a "significantly faster" bond buyout plan in order to boost the Eurozone's recovery.

Transient growth... or not?

Leaving Croatia and the Eurozone aside for a minute, investors are primarily worried about inflation in the United States, given a recent announcement that it jumped to 5 percent in May, the most since back in crisis-dominated 2008. That’s even more than expected (analysts in a Reuters poll estimated it at 4.7 percent) and well above the Federal Reserve’s target levels of about 2 percent. Those who believe that, like the ECB, the US Federal Reserve will not tighten its monetary policy, point to the "pandemic" impact on price growth as an argument.

Products such as furniture, used cars, car rentals, hotel accommodation and plane tickets became more expensive. But core inflation, excluding energy and food, rose 3.8 percent in May, the most since way back 1992, and some analysts see that as a cause for legitimate concern.

For more on Croatian producer prices, make sure to follow our business section.

Wednesday, 19 May 2021

Annual Inflation in EU and Croatia in April Highest in Two and a Half Years

ZAGREB, 19 May, 2021 - Annual inflation in the European Union in April reached its highest level in nearly two and a half years, and Croatia also followed this trend, according to a report released on Wednesday by the EU statistical office, Eurostat. 

EU annual inflation was 2.0% in April, up from 1.7% in March, and this was its highest level since November 2018. In April 2020, the annual inflation rate was 0.7%.

The euro area annual inflation rate rose by 0.3 percentage points from March to 1.6% in April, its highest level since April 2019. In April 2020, the annual rate was 0.3%.

The highest annual inflation rates were recorded in Hungary (5.2%), Poland (5.1%) and Luxembourg (3.3%), while the lowest rates were registered in Greece (-1.1%), Portugal (-0.1%) and Malta (0.1%). 

In Croatia, annual inflation in April increased by 2.1%, its highest level since August 2018. In March, the annual rate was 1.6%.

The annual inflation rate of 2.1% was also recorded in Germany and Belgium.

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Sunday, 20 September 2020

Inflation in Croatia in August: Food and Other Product Prices Rise

September the 20th, 2020 - The coronavirus pandemic might have thrown a spanner in the global and domestic economy's works, but there has still been a certain level of inflation in Croatia this summer. Consumer prices in August fell slightly, by 0.1 percent, both compared to the previous month and compared to August last year.

As Novac/Marina Klepo writes on the 19th of September, 2020, this marks the fifth month of deflation on an annual basis in Croatia and it began in April after the economy was all but shut down during the month of lockdown in Croatia.

Thanks to seasonal discounts, the largest monthly drop in prices in August was recorded by the clothing and footwear sector - by 3.6 percent. At the annual level, on the other hand, price movements are still mostly influenced by liquid fuels, which were almost 30 percent cheaper than they were one year ago.

As the coronavirus crisis has had and continues to have a significant impact on the demand for various products, it did the same to their prices. Apart from energy, transport prices have fallen the most in the past year, by 5.2 percent, and this is a category that makes up 15 percent of the consumer basket. At the same time, some services and products have become significantly cheaper, while others have become more expensive. Airline tickets, for example, are 19 percent cheaper, and bicycle prices are up by 8.5 percent.

On the other hand, the inflation in Croatia has been in regard to food prices which have risen by an average of 1.2 percent, but some products have risen much more than that - fruit is 7.8 percent more expensive than it was a year ago, and meat prices have risen by 3.9 percent, while the price of bread and cereals is one percent higher than it was in 2019.

That being said, despite the inflation in Croatia when it comes to certain food products, vegetables are 4.9 percent cheaper than they were back in 2019, and oil and fat prices have fallen by 3.6 percent. Alcoholic beverages and tobacco significantly contributed to the "mitigation" of the fall in consumer prices on an annual basis, with a price increase of 5.2 percent, which is associated with an increase in excise duties on such products.

By the end of this year, RBA analysts expect a decline in average annual consumer price rates, and the year-on-year inflation rate should stagnate.

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