ECONOMY

Alcohol and tobacco prices spur inflation

Spikes in the prices of alcohol and tobacco products took inflation to 5.2 percent on a yearly basis last month, just lower than May’s 5.4 percent, figures compiled by the National Statistical Authority showed yesterday. The considerable growth in the special consumption tax on alcoholic drinks, cigarettes and fuel as well as the housing hikes of the last few months saw the country’s consumer price index continue to outpace the eurozone’s average rate in June. However, there was a monthly price contraction of 0.3 percent from May, thanks to a small drop in the prices of fruit and vegetables. The government has set a 1.9 percent target for inflation for the entire year, but economists expect it to soar to 4.5 percent. This month is likely to see a fresh rise, however, after an overhaul of the value-added tax system and a hike in VAT as of July 1.