Consumer prices in Croatia dropped 0.6% in August compared with the same month last year, which is the largest drop since January, resulting mostly from a sharp fall in fuel prices, the latest statistics show.

The State Bureau of Statistics (DZS) has reported that this trend indicates the continuation of deflationary pressure with consumer prices stagnating or falling for two years now.  
August is the second month in a row that prices have fallen and the 0.6% drop on the year is the largest fall in prices since January when prices slipped by 0.9%. The biggest drop in prices was felt in transport (7.5%), with the price of fuel for transport diving by 11.9%. 
"Deflationary pressure is being upheld by the lower fuel and gas prices on an annual level because the price of crude oil continues to be lower than for the same period last year," analysts from Raiffeisenbank Austria (RBA) said in a comment on the latest DZS figures.  
Some prices rose on the year, such as prices in the health sector, which went up 2.4%, followed by a 2% increase in prices of alcohol and tobacco products. Prices of food and non-alcoholic beverages, which make up almost 30% of the shopping basket, rose by 1%.  
Most analysts expect consumer prices to stagnate or to experience a slight deflation.  "The negative impact of lower fuel prices on the annual growth of consumer prices will be felt for the most part of the year. Imported deflationary trends and weaker domestic demand continue to be the main barrier to higher growth rates in consumer prices," RBA analysts said.  
In the first eight months of the year, consumer prices were 0.3% lower on the year, which indicates that deflation is continuing. Last year consumer prices fell by 0.2% compared with 2013, and 2014 will be remembered as the first deflationary year in the history of the country.


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