As of November 2024, Croatia experienced a CPI growth of 2.8% YoY, mainly driven by robust economic and personal consumption growth, while Slovenia’s more moderate inflation (+1.8% YoY) reflects its tempered industry-oriented economic growth less driven by tourist activity.
Croatia
Similar to the previous month, inflation continues to pose challenges for Croatia, with CPI growth amounting to 0.4% MoM and 2.8% YoY in November. However, this comes paired with strong Q3 GDP growth, which was also reported last week.
Croatian CPI YoY growth rate (November 2014 – November 2024, %)
Source: Croatian Bureau of Statistics, InterCapital Research
Delving further into the data, on an annual basis, services recorded 5.1% higher prices YoY, followed by the prices of food, beverages, and tobacco which increased by 4.6%. Non-food industrial goods excluding energy recorded an increase of 0.4%, while energy prices were 0.4% cheaper compared to the same period last year.
On a monthly basis, energy prices rose by 2.5%, while food, beverages, and tobacco recorded a 0.2% increase. Services experienced a slight decline of 0.1%, while prices for non-food industrial goods excluding energy remained unchanged.
Following a strong tourist season and the highest relative Q3 GDP growth in the EU, persistent inflationary pressures in Croatia remain evident. Inflation is primarily driven by strong personal consumption, which grew by 6.7% YoY in October, showing no signs of slowing down as the holiday season is knocking on consumers’ doors. Therefore, sticky prices for services, as well as food, beverages, and tobacco were expected. On the positive side, energy costs have remained stable, with the monthly increase mainly reflecting higher demand due to the start of the heating season.
Slovenia
After last month’s zero annual CPI growth, Slovenia’s inflation has returned, recording a 0.7% MoM and a 1.8% YoY increase in November.
Slovenian CPI YoY growth rate (November 2014 – November 2024, %)
Source: SURS, InterCapital Research
Looking more closely at the components of the CPI, service prices grew by 2.8% YoY, while goods prices increased by 1.2%. Within goods, semi-durable goods recorded a 3.0% price growth, non-durable goods rose by 1.2%, while durable goods were 0.9% cheaper compared to the same period last year.
According to SURS, the largest impact on inflation – 0.4 p.p. – came from a 2.3% increase in the prices of food and non-alcoholic beverages. Additionally, higher prices in health (+6.1%), restaurants and hotels (+3.8%), clothing and footwear (+3.6), and recreation and culture (+3.1%) each contributed 0.3 p.p. to the overall inflation. On the other hand, lower prices in transport (-1.4% YoY) eased annual inflation by 0.2 p.p.
On a monthly basis, inflation was up by 0.7%. The largest contribution to inflation (0.5 p.p.) came from a 16.8% increase in electricity prices, as the transition to the high season began in November. Higher prices for motor fuels also added 0.2 p.p., with petrol up by 5.3% and diesel rising by 2.4%. Conversely, accommodation services (-4.5%) and package holidays (-2.3%) became cheaper, each reducing monthly inflation by 0.1 p.p. The rest of the price decreases in November contributed a further 0.1 p.p. to lower monthly inflation.
Slovenia’s more moderate inflation compared to Croatia reflects its more tempered economic growth, with Q3 GDP growth at 1.4%. Additionally, inflationary pressures are less influenced by tourist activity, as Slovenia’s economy is more diversified and industry-oriented. Nevertheless, increased personal consumption and price stickiness have not bypassed Slovenia entirely.
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 1.6% and a 0.8% increase on a MoM basis. Meanwhile, Croatia’s annual growth rate stood at 4.0%, with no change on a monthly basis.
HICP change for select EU countries (YoY, %, November 2024)
Source: Eurostat, InterCapital Research
When compared to the rest of the EU, Croatia recorded the 2nd highest inflation rate, trailing only Belgium, which had a 5.0% YoY growth. Overall, inflation in the Euro area amounted to 2.3% YoY, mostly influenced by statistical base effects, as on a monthly basis it decreased by 0.3%.
