Disinflation Still On The Cards

Croatian headline inflation ticked up in April, temporarily derailing the disinflationary process which we still expect to sustain through 2009. Indeed, consumer prices increased by 3.9% y-o-y up from 3.8% in March, though still marking a slowdown from 4.2% in February. The marginal increase in April's reading was partly attributable to an increase in the 'alcoholic beverages and tobacco' and 'clothing and footwear' components of the consumer price basket, which together account for 13.5% of the index. Indeed, these constituents experienced inflation of 15.9% and 2.5%, respectively in April, up from 6.9% and 1.4% the previous month.

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