According to the flash estimate by the Croatian Bureau of Statistics, the Croatian CPI in February 2024 grew by 4.1% YoY and increased by 0.2% MoM.

Last Friday, the Croatian Bureau of Statistics released the latest flash estimate for the Croatian CPI, for the month of February 2024. According to the flash estimate, the Croatian CPI grew by 4.1% YoY and increased by 0.2% at the end of February.

Croatian CPI YoY growth (February 2013 – February 2024, %)

Source: Croatian Bureau of Statistics, InterCapital Research

Breaking this change down into main components of the index, on a yearly basis, Food, beverages, and tobacco recorded an increase of 5.5%, Services grew by 6.4%, Non-food industrial goods without energy by 2.5%, while prices in Energy increased further by 0.4%.

Meanwhile, on a monthly basis, Energy increased by 1.5%, Services grew 0.5%, while Food, beverages, and tobacco increased by 1.1%, Services grew by 0.7%, while Non-food industrial goods without energy declined by 3.1%, and Energy decreased by 0.6%.

Furthermore, according to Eurostat’s latest release of the Harmonized Index of Consumer Prices (HICP), in January 2024 Euro area annual inflation amounted to 2.8%. Meanwhile, Croatia recorded a YoY HICP increase of 4.8%, while on a MoM basis, HICP decreased by 0.3%.

Comparison of HICP change with available European countries (January 2024, YoY, %)

Source: Eurostat, InterCapital Research

Compared to other available European countries, Croatia stands 3th with the highest HICP, right behind Estonia’s 5% and Romanias 7.3%. France, Slovenia and Sweden recorded 3.4% growth, Germany 3.1% and Spain 3.5%. %. In other words, even though there was an improvement in the HICP, the yearly data show us that Croatia still ranks as one of the most affected countries in terms of price growth.

Comparison of HICP change with available European countries (January 2024, MoM, %)

Source: Eurostat, InterCapital Research

Meanwhile, on the MoM basis, around half of the European countries recorded a decrease in the HICP, while the other half noted a MoM increase. Czechia ad Estonia noted the biggest MoM increase of 1.8% and 1.3%, respectively, followed by Romania at a 1.1% increase. The biggest MoM decline was noted by Ireland at 1.4% decrease. Croatia was placed somewhere around the middle of the observed countries with the aforementioned 0.3% decline.

While the trend in the slowdown in inflationary growth is clearly present, this month recorded a slight reverse/pause in the declining inflation growth rate trend. Overall, Croatian CPI reached its highest level in years. Although there is a clear trend of slowdown, elevated inflation even when dropping plays a more significant role due to that high base last year.

According to the latest release by the Slovenian Statistical Office, the country’s CPI increased by 0.8% MoM and increased by 3.4% YoY.

The trend of the Slovenian CPI decreasing, which has been present for the last couple of months ha reversed during February. After three months in a row that the MoM CPI decreased, CPI noted a 0.8% MoM increase during February. Furthermore, the YoY inflation has been, generally, getting more and more under control, while the growth in February amounted to only 3.4% (vs. 3.3% in January).

Slovenian CPI change (January 2011 – February 2024, YoY, %)

Source: Slovenian Statistical Office, InterCapital Research

The general trend of the slowdown did not extend during February, getting slightly further away from the target set by the ECB of 2% inflation. However, we note that we expect to soon reach a 2% expectation. Other countries in the EU have also recorded a slight growth in inflation, albeit the story differs from country to country. In any case, general trend is supportive of the interest rate cuts by the ECB, which seems more and more likely as we approach summer, as signalled by the ECB President.

Coming back to the Slovenian CPI, on the MoM basis, the price increase was mostly a result of package international holidays, which became 22.2% more expensive, contributing 0.4 p.p. to the inflation growth rate. Furthermore, 0.1 p.p. growth was added by petroleum products, as petrol prices decreased by 2%, and diesel prices by 2.5%.

Further, besides the aforementioned price increases, there were no notable price decreases in February.

Moving on to the yearly data, service prices increased by 5.1%, while goods prices grew by 2.6%. In the goods category, non-durable and semi-durable goods increased by 3.6% and 3.2%, respectively, while durable goods prices decreased by 1.8%.

In terms of the impact on the YoY inflation rate, a 0.6 p.p. increase came from higher prices in the health group, which grew by 10.9%. Following this category, we also have a 0.6 p.p. contribution from higher prices in the groups housing, water, electricity, gas, and other fuels, with an increase of 4.7%, as well as 6% higher prices of services by restaurants and hotels – contributing 0.4 p.p. to the inflation.

When compared to other countries in the EU, using the latest available data from January 2024 for the Harmonized Index of Consumer Prices (HICP), Slovenia places in the middle in terms of the YoY HICP, which amounted to 3.4%, while in the euro area inflation amounted to 2.8%.