HNB: The Rise in Service Prices Compensated for the Slowdown in Food Price Growth

The retention of August inflation at the level of the previous month is a result of the acceleration in service price growth, and to a lesser extent energy and industrial product prices, fully compensating for the slowdown in food price growth, writes in a commentary from the Croatian National Bank (HNB).

According to data published today by the State Bureau of Statistics, inflation measured by the national consumer price index (CPI), which does not include consumption by foreign guests and institutional households (such as educational, health, religious institutions, etc.), in August was 4.1 percent year-on-year, the same as in July.

Analysts from the central bank emphasized that the retention of inflation at the level of the previous month is a result of the acceleration in service price growth, to 6.4 percent in August from 5.7 percent in July, and to a lesser extent energy prices, to 2.5 from 2.4 percent, and industrial product prices, with a growth of 0.5 percent compared to 0.4 percent in July, fully compensating for the slowdown in food price growth, to 6.2 from 6.6 percent in July of this year.

Despite the slowdown in food price growth in August, they note, food prices contribute the most to overall inflation measured by the national indicator. Thus, food contributes two percentage points to the total consumer price inflation of 4.1 percent, while services contribute 1.7 percentage points.

The difference between the harmonized and national overall inflation indicators has slightly increased

The HNB points out that the difference between the harmonized and national overall inflation indicators in August slightly increased compared to the previous month, to 0.5 percentage points, which is much less than a year ago when it was 1.2 percentage points.

Namely, total inflation in Croatia measured by the harmonized consumer price index (HICP) according to the first estimate in August 2025 slightly accelerated to 4.6 percent, from 4.5 percent in July, mainly as a result of the acceleration in service price growth, to 7.1 from 6.6 percent in July. To a much lesser extent, the growth of energy and industrial product prices accelerated, while at the same time the growth of food prices slowed.

There was a slight acceleration in energy price growth, to 2.7 percent in August from 2.6 percent in July, despite, HNB analysts emphasize, the monthly decrease in energy prices reflecting the reduction in crude oil prices on the world market in August, influenced by increased supply, especially from OPEC+ countries, along with heightened concerns about rising global demand.

– Concerns about excess supply were further fueled by the announcement from OPEC+ countries regarding an increase in production quotas starting in September – they add.

The growth of industrial product prices, on the other hand, accelerated to 0.4 percent, from 0.3 percent in July.

On the other hand, food price inflation, after a pronounced acceleration in the previous three months, slowed in August to 6.6 percent from seven percent in July. Due to the slowdown in food price growth, their contribution to total consumer price inflation in August decreased to 1.9 percentage points, while the contribution of service prices increased to 2.3 percentage points, writes in the HNB commentary.

Due to the acceleration in service and industrial product price growth, core inflation, which excludes energy and food prices, accelerated in August to 4.1 percent, from 3.8 percent in July.

Total inflation (HICP) across the entire euro area slightly accelerated in August to 2.1 percent from two percent in July, so the difference between inflation in Croatia and the euro area average in August remained unchanged compared to the previous month, according to the HNB. Croatia had, after Estonia (6.2 percent), the highest inflation rate in the eurozone.