On Friday, the Croatian Statistical Office published the latest flash estimate for the Croatian CPI. According to the release, in June 2023 the Croatian CPI increased by 7.7% YoY, and 0.9% MoM.

The latest Croatian CPI numbers show us that even though the CPI has been on a downward trend on a YoY basis, on an MoM basis, it still continues growing. The main reason for this is the base effect: the inflation was already high in the same period last year, meaning that growth compared to that base is lower. This doesn’t necessarily mean that the price growth isn’t slowing down, only that the major factor for the reduction in the price growth (on a YoY basis) is due to the said base effect.

Overall, the CPI increased by 7.7% YoY, while on a MoM basis, it grew by 0.9%. Looking at the main components of the index, Food, beverage and tobacco increased by 13.6%, Non-food industrial goods without energy by 8.1%, Services by 7.6%, and Energy decreased by 3.3%.

Croatian CPI (February 2013 – June 2023, %)

Source: DZS, InterCapital Research

Meanwhile, on a monthly basis, Food, beverages and tobacco as well as Energy increased by 1.4% for each component, while Services grew by 1.2%. On the other hand, Non-food industrial goods without energy increased by 0.1%.

The trend in the decline of Energy prices (on a YoY basis) has been evident for a while now, as these prices have stabilized after their highest point recorded during the winter of 2022/2023. The increase across other categories is why inflation is considered “sticky” at this point, and the main reason why ECB still continues to increase interest rates. DZS notes that the final data for the CPI in June 2023 will be available on 17 July 2023, and since the start of the flash estimate releases, their numbers were close enough (+/- 0.1 p.p. MoM or YoY) compared to the flash estimate.