Producer prices of building materials in Croatia rose 1.3% y/y in June, after rising 1.2% y/y in May, the statistics institute announced on July 11.

The producer building material price index turned to posting annual growths in September and annual inflations have continued since then. Building material prices inflation slowed down to 0.10% y/y in January but showed an escalating trend for the following five consecutive months.

Producer prices of building material remained unchanged in June compared to May, following 0.1% m/m rise in the previous month, according to data from the statistics office.

Croatia’s industrial producer prices turned to growth in December, three months later compared to building material prices, and they remained in positive territory during the first half. Annual producer price inflation saw its peak point of 2.9% in April. However, industrial producer prices declined during the next two months.

Annual industrial producer price inflation in Croatia slowed down further to 0.3% y/y in June, the lowest level since December.

Meanwhile, consumer prices have shown an escalating inflationary trend since December and reached 1.4% y/y in April, although annual CPI inflation declined to 1.1% in May. April’s 1.4% annual inflation figure was the highest since August 2013’s 1.9%.

The Croatian Central Bank (HNB) forecasts that annual inflation will increase to 1.6% in 2017. In February, the European Commission hiked its average inflation forecast for 2017 to 1.7%, comparing favourably with the -0.9% in the Spring Forecast.

In April, the IMF also revised its 2017 average CPI inflation forecast to 1.1% from 0.8% in October. The fund forecasts CPI inflation will rise to 0.8% at end-2017.

The three–year disinflation period is behind Croatia, and average 2017 CPI inflation might reach 1.9% y/y in 2017, according to Raiffeisen Bank.