As of August 2024, Croatia and Slovenia are on different paths regarding inflation, with Croatia’s HICP at 3.0% YoY and Slovenia’s at 1.0% YoY (Euro area – 2.2% in August). While both countries are moving toward greater price stability, Slovenia’s lower inflation rate reflects a more successful containment of inflationary pressures compared to Croatia. Nevertheless, we can notice CPI growth coming to a 2% ECB target overall.

Croatian Inflation Trends

In July 2024, Croatia’s inflation was relatively stable, with the Consumer Price Index (CPI) registering a stagnant month-on-month (MoM) change and a year-on-year (YoY) growth of 2.3%. This stability reflected a balance between rising service prices and moderating costs in food and energy. By August 2024, Croatia’s inflation further moderated. The CPI recorded a YoY increase of 1.8%, down from 2.4% in June. Key factors in this trend include:

• Service prices, which saw a 5.9% YoY increase, continue to drive inflation in the tourism and hospitality sectors.
• Food, beverages, and tobacco prices rose by 2.3% YoY, putting pressure on consumer costs.
• Energy prices, notably declined by 3.7% YoY, providing significant relief from previous inflationary pressures.

On an MoM basis, the CPI remained stable, indicating that inflationary pressures may have peaked, and price levels are stabilizing as Croatia moves through the year.

Croatian CPI YoY growth rate (February 2013 – August 2024, %)

Source: Croatian Bureau of Statistics, InterCapital Research

Slovenian Inflation Trends

By August 2024, Slovenia’s inflation rate had continued to decline. According to the latest data from the Statistical Office of Slovenia, the CPI in August 2024 increased by 0.9% YoY and actually decreased by 0.2% MoM. This marks a significant slowdown in inflation compared to previous months and reflects effective control measures over rising prices.

Key details include:

• Food prices, despite a moderate increase, no longer exert the same inflationary pressure as earlier in the year.
• Non-durable goods saw a 0.9% YoY rise, indicating a relatively stable market for essential consumer goods.
• Service prices also contributed to the modest inflation, but overall, the pace of price increases has slowed.

This decrease in the monthly inflation rate and a very modest yearly increase show Slovenia’s success in stabilizing its economy and keeping inflation under control.

Slovenian CPI change (January 2011 – August 2024, %)

Source: SURS, InterCapital Research

Croatia and Slovenia in the European Context

The Harmonized Index of Consumer Prices (HICP) provides a comparative measure of inflation across EU member states, reflecting the broader economic trends within the Eurozone. As of August 2024, Croatia’s HICP showed a 3.0% YoY increase, while Slovenia’s HICP stood at 1.0% YoY (the Euro area average stood at 2.2% in August). These figures position Croatia slightly above the Eurozone average, indicating that inflationary pressures remain more pronounced there compared to Slovenia, which stands below the average.

HICP comparison between Euro area countries (August 2024, YoY, %)

Source: Croatian Bureau of Statistics, InterCapital Research

In the broader European context, Croatia, with its higher HICP, still reflects the ongoing inflationary pressures, particularly in sectors such as services and food, though the overall trend suggests some easing. Slovenia’s lower HICP suggests it is experiencing greater success in controlling inflation compared to both Croatia and other Eurozone countries still facing higher inflation rates. The significant moderation in Slovenia is particularly notable given the challenges faced earlier in the year. Slovenia’s alignment with a lower HICP indicates its economic measures are effectively curbing inflation, offering a more stable economic outlook compared to its neighbors. This difference in HICP between Croatia and Slovenia highlights the varying inflationary dynamics within the Eurozone, with Slovenia potentially benefiting from more effective inflation control policies or other favorable economic conditions.

Conclusion

As of August 2024, Croatia and Slovenia are on different paths regarding inflation, with Croatia’s HICP at 3.0% YoY and Slovenia’s at 1.0% YoY (Euro area – 2.2% in August). While both countries are moving toward greater price stability, Slovenia’s lower inflation rate reflects a more successful containment of inflationary pressures compared to Croatia. This contrast offers valuable insights into the effectiveness of different economic strategies within the Eurozone, with Slovenia emerging as a stronger performer in the fight against inflation. This underscores the importance of monitoring inflation trends closely, as they vary significantly even among neighboring countries within the Eurozone, reflecting different economic realities and policy impacts. Nevertheless, we can notice CPI growth coming to a 2% ECB target overall.