The largest contributors to the CPI growth on the annual level were Food and non-alcoholic beverages, which increased by 19.7%, followed by Restaurants and hotels, at 17.8%, Housing, water, electricity, ga and other fuels by 16.1% and Furnishings, household equipment and routine household maintenance, at 15.8%.
The Croatia Bureau of Statistics (DZS) has published the latest monthly report of the changes recorded by the Croatian Consumer price indices (CPI), for the month of October. Starting off with the annual level, the CPI in Croatia increased by 13.2% in October 2022, while on a monthly level, it increased by 1.3% on average. Meanwhile, on the annual average, the growth of the CPI amounted to 9.4%. The 13.2% increase in the CPI surpassed the last 2 months (12.3% and 12.8%) record, marking the highest CPI annual growth rate in the Croatian history, accelerating the trend of inflation growth that started in the 2nd half of 2021.
CPI (January 2023 – October 2022, %)
Looking at the largest contributors to this growth, on the annual level, the highest increase in CPI was recorded in the following segments: Food and non-alcoholic beverages, which grew by 19.7%. Next up, we have Restaurants and hotels, which grew by 17.8%, Housing, water, electricity, ga and other fuels by 16.1% and household equipment and routine household maintenance, which increased by 15.8%. Following them, we have Transport, which increased by 11.5%, Miscellaneous goods and services, which grew by 10.7%, Recreation and culture, with 8.4% growth, Clothing and footwear, with 6.6% and finally, alcoholic beverages and tobacco, with 4.4%.
This would mean that the trend we have witnessed for the last couple of months continues; not only does the overall inflation increase, which started with higher energy and food & beverage prices, but the pressure from higher inflation has been present on the market for so long, that it has spilled over to almost every industry. Now we have these “secondary” effects, with segments that aren’t directly affected by the main driver of the inflation growth (Russian invasion of Ukraine), increasing significantly. This mainly refers to categories such as Recreation and culture, and Clothing and footwear, but as mentioned, every category is affected.
Due to the composition and different weights in the CPI index measurements, these categories, even if equal, have a different effect on the CPI change. The highest weight in the calculation goes to Food and non-alcoholic beverages, which has 25.9% of the total, meaning that it contributed 5.11 p.p. to the CPI growth on the annual level, or more than one-third. Next up, we have Housing, water, electricity, gas and other fuels, which have 16.9% weight in the CPI calculation, meaning that is contributed 2.72 p.p. to the annual growth. Finally, we have Transport, with 14.7% of the weight, which has contributed 1.69 p.p. to the CPI growth. Other categories remained below 1 p.p. to the CPI growth contribution.
CPI change by categories – October 2022 (YoY, %)
Moving on to the monthly level, the CPI increased by 1.3% MoM on average. The story of this growth is somewhat different. The highest average increase in the CPI was recorded by Clothing and footwear, which increased by 6.9%, and contributed 0.4 p.p. to the CPI growth, however, this is due to new clothes and footwear collections. Also, we note that Clothing and footwear increased by over 20% in the previous months, so this month represents a lower growth in prices in this category. Other noteworthy categories include Housing, water, electricity, gas and other fuels, which increased by 2.8% (and contributed 0.47 p.p. to the growth), and Food and non-alcoholic beverages, which increased by 1% (+0.26 p.p. to overall growth). What is also interesting is the fact that Recreation and culture prices declined by 0.8% MoM, just slightly offsetting the growth in CPI.
What all of this data shows us is that prices in Croatia, like in the region, are still increasing, and moreover, they have spilled over to many different segments of the economy. The main drivers of the inflation growth, i.e. the war in Ukraine, and the subsequent sanctions on Russia are still present and not winding down, so further inflation growth could be expected.