Inflation in Croatia went up to 1.9 per cent in December, less than expected, due to a decline in consumption, which prompted business owners to cut prices sooner than usual.
In December 2009, consumer prices declined 0.6 per cent on the month andwent up 1.9 per cent on the year, according to the Central Bureau ofStatistics.
This marked a lower inflation than expected. Six macroeconomists interviewedby Hina anticipated that inflation would go from 1.8 per cent in November to2.4 per cent in December.
The month-on-month decline in prices in December was mainly due to a 7.2 percent decline in the prices of clothes and footwear, a consequence of seasonalprice cuts. The prices of food and soft drinks stayed at the November level.
"The steep decline in spending prompted business owners to cut pricessooner than usual. Prices in December were down 0.6 per cent from November,which is not usual for that month. Business owners usually cut prices inJanuary, but this time they apparently decided to do so earlier," saidZdeslav Santic, chief economist at Splitska Banka.
The decline in retail trade is one of the main obstacles to the growth ofconsumer prices.
Retail trade in November dropped 15.8 per cent on the year.
December saw an increase in the prices of housing, water, power, gas andother fuels.
"The growth in the prices of power and heating fuels is a consequence ofcolder weather at the end of last year, but this pressure on the growth ofinflation was evidently curbed by the decline in other prices, which is aconsequence of the decline in consumption," said Santic.
