In November 2023, the Croatian CPI growth amounted to 4.7% YoY, while it declined by 0.2% MoM, according to the flash estimate. We emphasize this is the first month to note a MoM decline in CPI.
Yesterday, the Croatian Bureau of Statistics released the flash estimate of the Croatian CPI growth, for the month of November 2023. According to the estimate, the Croatian CPI increased by 4.7% YoY, but it declined by 0.2% MoM. However, one has to note that CPI was already significantly elevated in the same period last year, amounting to a 13.5% growth YoY, marking the highest point of CPI growth. As such, the 4.7% YoY increase is more due to the effect of the high base, rather than the real and continued slowdown in inflation.
Croatian CPI YoY growth (February 2013 – November 2023, %)
Source: Croatian Bureau of Statistics, InterCapital Research
However, the MoM data is more encouraging, as it demonstrates that a slowdown in inflation has started to take place. Of course, a single month does not set a trend, and it will require several consecutive months to be able to conclude that the inflationary pressures have started cooling off.
Coming back to the estimate itself, on the annual basis, the estimated change for Food, beverages and tobacco is 7.4%, for Services it is 6.9%, for Non-food industrial goods without energy it is 4.8%, while on the other hand, prices in Energy declined by 3.4% YoY. Meanwhile, on a MoM basis, Non-food industrial goods without energy as well as Food, beverages and tobacco recorded 0.2% growth, respectively, while Energy decreased by 1.7%. Furthermore, prices in Services remained roughly the same.
Here we can also see a trend that has been prevalent for quite a while now. Due to the continued elevated energy prices, inflation spilled over to other categories. Inflation in Food, beverages and tobacco has been present almost from the start, while Services inflation is mostly tied to the fact that inflationary pressures on energy and food started all the way back in 2021 due to supply chain issues related to COVID-19 restriction, inflation in Services was subdued due to the lack of demand for them. This would of course mainly relate to tourism, the main service offered in Croatia, but also other affected industries by the pandemic, such as restaurants, cinemas, theatres, etc., which all recorded price hikes.
Next up, we can also look at the harmonized index of consumer prices, HICP, which allows us to compare Croatia to other European countries. In terms of overall Euro area inflation, it amounted to 2.4% YoY. For Croatia, annual growth amounted to 5.5%, while the monthly rate amounted to -0.4%.
Comparison of HICP change with available European countries (November 2023, YoY, %)
Source: Croatian Bureau of Statistics, InterCapital Research
As we can see in the yearly data, Croatia once again recorded the 2nd largest HICP, only behind Slovakia’s 6.9%. Slovenia meanwhile, recorded 4.5% growth, while other European heavyweights, such as Germany, France, Spain, and Austria, recorded inflation of 2.3%, 3.8%, 3.2%, and 4.9%, respectively.
Comparison of HICP change with available European countries (November 2023, MoM, %)
Source: Croatian Bureau of Statistics, InterCapital Research
In terms of MoM data, most European countries recorded decreases, with the largest one being Malta at -2.9% MoM, as well as the Netherlands and Cyprus, both at -1.5%. Slovenia recorded a 0.8% decline, while Germany, France, Spain, and Austria recorded -0.7%, -0.3%, -0.6%, and 0.2% MoM HICP, respectively.
