As of January 2025, Croatia experienced a CPI growth of 4.0% YoY, reflecting continued inflationary pressures in the wake of the robust economic growth, increased demand and expansive fiscal policy. In contrast, Slovenia’s more moderate inflation of 2.0% YoY reflects stable, well-diversified economy and a more appropriate fiscal policy.
Croatia
Once again, inflation continues to pose challenges for Croatia, with CPI growth amounting to 0.1% MoM and 4.0% YoY in January 2025.
Croatian CPI YoY growth rate (January 2015 – January 2025, %)
Source: Croatian Bureau of Statistics, InterCapital Research
Delving deeper into the data, services recorded an annual price increase of 6.3%, followed by food, beverages and tobacco prices which rose by 4.7%. Energy prices increased by 4.5%, while non-food industrial goods (excluding energy) were 0.5% more expensive compared to the same period last year.
On a monthly basis, energy prices rose by 2.2%, services increased by 1.4%, while food, beverages and tobacco prices recorded a 1.0% increase. Meanwhile, non-food industrial goods excluding energy saw a 3.4% monthly decrease.
This “new wave” of inflation in Croatia can be attributed to robust GDP growth, increased domestic and tourist demand, rising wages and the expansive fiscal policy, compounded by the government’s reluctance to implement significant tax reforms/reliefs. We analyzed roots of Croatian inflation in our last week’s blog, which you can check out here.
Slovenia
As for Slovenia, CPI increased by 2.0% at the annual level in January 2025. For reference, inflation stood at 3.3% one year ago. At the monthly level, consumer prices deflated, recording a 0.4% decrease compared to December 2024.
Slovenian CPI YoY growth rate (January 2015 – January 2025, %)
Source: SURS, InterCapital Research
Looking more closely at the components of the CPI, service prices grew on average by 3.1%, while goods prices increased by 1.5%. Within goods, non-durables rose by 2.1%, semi-durables recorded a 1.0% price growth, while durable goods were 0.3% cheaper compared to the same period last year.
According to SURS, the largest impact on inflation – 0.4 p.p. each – came from a 3% increase in prices of transport and 2.3% higher prices of food and non-alcoholic beverages. Additionally, higher prices in restaurants and hotels (+4.8%) contributed 0.3 p.p., while price increases in alcoholic beverages and tobacco (+3.5%), recreation and culture (+2.2%) and miscellaneous goods and services (2.2%) each contributed 0.2 p.p. to the overall inflation.
On a monthly basis, inflation was down by 0.4% in January 2025. The largest contribution to the deflation (0.5 p.p.) came from a 10.6% decrease in clothing prices as a result of winter sales. An additional 0.1 p.p. each was added by lower prices of footwear (-6.7%) and cheaper package holidays (-2.9%). On the other hand, price increases in non-alcoholic beverages (+3.1%), catering services (+1.5%) and petroleum products (liquid fuels +1.2%, petrol +1.4%, diesel +0.9%) each contributed 0.1 p.p. to lower monthly deflation.
Therefore, Slovenia’s more moderate inflation of 2.0% annual growth, indicates a stable, well-diversified economy and a more appropriate fiscal policy. This makes it one of the countries with the lowest inflation in Europe.
The harmonized index of consumer prices in the EU
Taking a quick look at the harmonized index of consumer prices (HICP), Slovenia recorded an annual growth of 2.3% and a 0.3% decrease on a MoM basis. Meanwhile, Croatia’s annual growth rate stood at 5.0%, with a 0.2% monthly increase.
HICP YoY change for select EU countries (January 2025, %)
Source: Eurostat, InterCapital Research
When compared to the rest of the Euro area, Croatia stands at the top of the list after surpassing Belgium last month as the country with the highest inflation rate. Overall, inflation in the Euro area amounted to 2.5% YoY, up from 2.4% in December 2024. Looking at the main components of EA inflation, services increased 3.9% YoY, followed by food, alcohol and tobacco at 2.3%, energy at 1.8% and non-energy industrial goods at 0.5%. These developments further complicate the convergence toward the targeted 2% inflation in the Euro area, while ECB is continuing to lower the interest rates due to slow-growing European economy.
