HNB: Reduced Difference in Inflation Rate Between Croatia and the Eurozone

The Croatian National Bank (HNB) stated in its commentary on the latest inflation data on Friday that inflation slowed in April compared to March according to both the harmonized and national indices, with higher inflation measured by the harmonized indicator mainly resulting from a greater contribution of service prices, and the difference in inflation between Croatia and the Eurozone has also decreased.

Total inflation in Croatia measured by the harmonized index of consumer prices (HIPC) according to the first estimate from the Croatian Bureau of Statistics (DZS) slowed from 4.3% in March to 3.9% in April this year, while core inflation, which excludes energy and food prices, remained at 4.2%, the same as in the previous month.

The slowdown in total inflation in Croatia, measured by HIPC, in April was contributed to by the slowdown in inflation of all major components, except for industrial products, according to HNB.

Food price inflation slowed for the third consecutive month (to 4.6% in April from 5.2% in March). Additionally, energy price inflation significantly slowed (to 1.1% from 2.2% in March) as a result of the decrease in oil derivative prices. Furthermore, service price inflation slowed (to 7.2% from 7.6%), while industrial product price inflation accelerated (to 0.5% from 0.2%). Accordingly, core inflation (which excludes energy and food prices) remained at 4.2%.

– Despite the slowdown in service price inflation, they continue to be the component with the greatest significance for overall inflation trends in Croatia. Services contribute 2.3 percentage points to the total consumer price inflation (measured by HIPC) of 3.9%, while food contributes 1.3 percentage points – stated the central bank.

Without the consumption of foreign guests, inflation is lower

Inflation measured by the national index of consumer prices (IPC), which does not include the consumption of foreign guests and institutional households (such as educational, health, religious institutions, etc.), slightly slowed from 3.2% in March to 3.1% in April.

As emphasized by HNB, the reduction in total inflation in April, measured by IPC, was contributed to by the slowdown in energy price inflation (to 1.1% from 1.9%) and food (to 4.1% from 4.4%). In contrast, inflation of industrial product prices increased (to 0.3% from -0.2%) and service price inflation (to 6.1% from 6%). The difference between the harmonized and national indicators of total inflation in April decreased to 0.8 percentage points.

– The higher inflation measured by the harmonized than the national inflation indicator mainly results from the greater contribution of service prices, which accounted for the aforementioned 2.3 percentage points in HIPC compared to 1.6 percentage points contributed by services to inflation measured by IPC. This is a result of a more pronounced annual growth in service prices measured by HIPC and a larger share of services in the consumer basket used to calculate the harmonized indicator because it also includes the consumption of foreign tourists – stated HNB.

Total inflation (HIPC) at the level of the entire euro area remained at 2.2% in April 2025, with a smaller contribution of energy prices to total inflation offsetting a larger contribution from services and unprocessed food products. Therefore, the difference between inflation in Croatia and the euro area average in April decreased compared to the previous month, according to HNB.