According to the latest estimate of the Croatian CPI, during March 2024 it grew by 0.9% MoM and 4.1% YoY. Furthermore, measured by the Harmonized Index of Consumer Prices (HICP) which allows comparisons to other European countries, Croatian CPI growth stood at 0.9% MoM, and 4.9% YoY, marking the highest growth in the entire Eurozone in March.
The latest flash estimate of the Croatian CPI has been released by the Croatian Bureau of Statistics (DZS). According to the release, the Croatian CPI grew by 0.9% MoM, and 4.1% YoY in March 2024. This would mean that the inflation rate remains stubbornly high, especially when compared to the EU average, which stood at 2.4% during March, as well as the 2% target set out by the ECB. Furthermore, the 0.9% MoM increase is even more worrying.
Croatian CPI YoY growth rate (February 2013 – March 2024, %)
Source: Croatian Bureau of Statistics, InterCapital Research
Breaking this growth down, on a monthly basis, prices in Non-food industrial goods without energy grew by 2.4%, in Services by 0.4%, in beverages and tobacco by 0.3%, and in Energy by 0.2%. Meanwhile, on an annual basis, prices in Services grew by 6.6%, for Food, beverages, and tobacco by 4.7%, for Non-food industrial goods without energy by 2.5%, and for Energy by 1.4%.
It should be noted that this represents the first flash estimate, and a more detailed breakdown of growth, as well as any possible revisions, will be released by 16 April 2024.
YoY HICP comparison between the Eurozone countries (March 2024, YoY, %)
Source: Eurostat, InterCapital Research
When compared to the other European countries, however, the story is more dire. According to the HICP comparison, the Croatian inflation rate stood at 4.9% YoY in March, marking the highest inflation rate among all the Eurozone countries. Following Croatia there is Austria at 4.2%, Estonia at 4.1%, Belgium at 3.8%, and Greece as well as Slovenia, both at 3.4%, respectively.
MoM HICP comparison between the Eurozone countries (March 2024, MoM, %)
Source: Eurostat, InterCapital Research
The situation is slightly better for the monthly data, as Croatia recorded 0.9% MoM inflation growth, placing it behind Malta at 1.1%, Latvia and Italy at 1.2% each, respectively, Spain at 1.3%, Greece at 1.8%, and Portugal, at 2.3%.
Unfortunately, what all of this data is showing us is that the battle with inflation in Croatia is far from over. While the switch to the euro at the beginning of 2023 does provide lower costs and better security overall, one thing it cannot do is allow the country to lead a fiscal policy by itself, which could help Croatia better manage its inflation. At the same time however, inflation rates in European countries that haven’t adopted the euro are still significantly higher than for countries that have, meaning that it is unlikely that inflation would have been lower if another currency was used. Lastly, if the expected ECB interest rate cuts do occur by summer, it could leave Croatia in a vulnerable position if the inflation rate isn’t managed by then.
