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Croatia: August CPI

Tue, Sep 15 2009, 14:03 GMT
by Alen Kovac

Erste Bank der oesterreichischen Sparkassen AG


CPI pressures remained subdued in August

CPI inflation continued to perform under downward pressure, recording a 0.1% m/m decline and posting 1.5% on the annual level. Weak pressures on the monthly level came as a surprise, as the VAT increase took effect in August (VAT was increased as an anti-recession measure by 1pp, to 23%, effective from the beginning of August), though not showing up in the figures. Food, beverages and tobacco products were down 0.2% m/m, while clothing and footwear prices fell 3.8% m/m. On the other hand, energy prices increased 1.4% m/m, mainly resulting from higher fuel prices. Clearly, the August figures had not incorporated the increased VAT rate and, given weak domestic demand, we continue to anticipate that the overall pass-through effect from this increase will be weak. The coming months should not bring dramatic changes to this pattern, with some seasonal categories under pressure. In line with the reversing base effect, we see the annual figures on an upward trajectory in the coming months and remain confident in our 2.9% average inflation forecast for 2009.


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Erste Bank http://global.treasury.erstebank.com | Rainer.Singer@erstebank.at

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This document is intended as an additional information source, aimed towards our customers. It is based on the best resources available to the authors at press time. The information and data sources utilised are deemed reliable, however, Erste Bank Sparkassen (CR) and affiliates do not take any responsibility for accuracy nor completeness of the information contained herein. This document is neither an offer nor an invitation to buy or sell any securities.

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