Montenegro's consumer price index (CPI) edged up 0.5% y/y in October 2013, easing from a 1.8% y/y increase the month before due to a slower growth of food prices and falling transport, recreation and communications costs, data from the statistics office showed.

In monthly terms, consumer prices inched down 0.2% in October after a 0.1% m/m rise in September. October’s CPI rose 2.5% compared to the 2012 average.

Prices of food and non-alcoholic beverages, which have the strongest weight in the CPI basket, went up 0.3%y/y in October following a 3.5% annual hike the month before, due to falling bread, oils and fats and milk products costs.

Housing and utilities charges advanced 1.9% y/y in October, easing from a 2.5% hike in September, thanks to falling costs of solid fuel and materials for the maintenance and repair of the dwelling.

Prices of alcoholic beverages recorded the strongest annual growth in October rising by 7.7% y/y, yet, easing from a 8.1% y/y increase in September.

Furnishing and household equipment costs, continued retreating, shrinking 0.5% y/y in October, despite narrowing from a 0.8% y/y contraction in September. Transport price deflation deepened to 3.4% y/y in October from 2.3% y/y in September dragged down by falling fuel costs. Recreation and culture prices, likewise, had a downward pressure on the overall CPI index as they fell 2.6% y/y in October, dropping for the fifth straight month.

Montenegro's average inflation accelerated to 4.1% in 2012 from 3.1% in 2011 mainly due to higher utilities and food and tourism sector related prices. The central bank expects inflation to average 3-5% in 2013.