Overall inflation in January
According to Eurostat’s flash estimate, Croatia’s overall inflation measured by the harmonised index of consumer prices (HICP) accelerated to 5.0% in January 2025 from 4.5% in December 2024 (Figure 1 and Table 1), while core inflation (which excludes energy and food prices) accelerated to 4.7% from 4.6%. The acceleration of overall inflation in January was due to a rise in the inflation of all its main components, except industrial goods. Inflation measured by the national consumer price index (CPI), which does not cover consumption by foreign tourists and institutional households (such as educational, health and religious institutions, etc.) also accelerated, increasing from 3.4% in December 2024 to 4.0% in January 2025. Accordingly, the difference between the harmonised and the national overall inflation indicators, resulting mostly from an increased contribution of services prices to overall HICP inflation, narrowed slightly in January. Euro area-wide overall inflation (HICP) accelerated slightly to 2.5% in January 2025 from 2.4% in December 2024, with the result that the difference between inflation in Croatia and the euro area average increased in January relative to December. Energy prices contributed to the acceleration of euro area-wide inflation in January. Euro area core inflation remained at 2.7%, holding steady from the preceding four months.
Figure 1 Inflation indicators in Croatia
Notes: Core inflation is measured by the harmonised index of consumer prices, which excludes energy, food, alcoholic beverages and tobacco prices. The latest available data refer to the first estimate for January 2025, with contributions for that month calculated on the basis of weights from the previous year.
Sources: Eurostat, CBS and CNB calculations.
Table 1 Inflation in Croatia, main components
Notes: The Harmonised Index of Consumer Prices (HICP) is calculated according to a harmonised approach that provides a comparable measure of inflation for EU member states, whereas the Consumer Price Index (CPI) is a national consumer price index. The CPI and HICP are calculated on the basis of the same representative basket of goods and services. The main difference is in the population coverage (HICP includes the total consumption of institutional households and non-residents in the Croatian territory, which is not included in the national consumer price index).
Sources: Eurostat and CBS.
HICP inflation components in Croatia in January
The acceleration of overall inflation in January 2025 primarily stemmed from the noticeable acceleration of energy inflation (up to 5.3% from 2.4% in December 2024), due mainly to a rise in the prices of refined petroleum products and electricity. Services inflation also sharply accelerated in January (to 8.2% from 7.7% in December 2024), while food inflation accelerated only slightly (to 5.4% from 5.3% in December). In contrast, industrial goods inflation decelerated slightly in January (to 0.6% from 0.8% in December 2024). Despite the slowdown in industrial goods inflation, core inflation (which excludes energy and food prices) accelerated from 4.6% in December 2024 to 4.7% in January 2025 due to a further acceleration of services prices, which continue to be the key component of Croatia’s overall inflation trends. Services and food contribute 2.6 and 1.6 percentage points, respectively, to the overall consumer price inflation of 5.0%.
Change in inflation from the previous month: base effects and current inflation
The change in the annual rate of inflation (HICP) month-on-month – from 4.5% in December 2024 to 5.0% in January 2025 – depends on the change in consumer prices from the month before (current inflation) and the monthly rate of change in consumer prices in the same month of the year before (base effects).[1] The inflation acceleration in January 2025 therefore mostly reflects current inflationary pressures (Figure 2), especially as regards energy and services, and to a smaller extent also unfavourable base effects regarding all components except services. The monthly inflation of prices of all the main inflation components (except industrial goods) exceeded its usual historical value in January (Figure 3).
Figure 2 Contribution of base effects and current developments to the change in the annual inflation rate by months (left) and by components (right) in January 2025
Notes: The base effects and current developments have been adjusted for the usual developments that are relatively stable and do not affect considerably the change in annual inflation. The contribution of components to the change in overall inflation in January 2025 on the right figure were calculated based on weights from the previous year.
Sources: Eurostat and CNB calculations.
Figure 3 Deviations of the monthly rate of change of inflation from the usual developments
Notes: Data refer to the six-month moving averages of the contributions of unusual developments to the monthly rate of change.
Sources: Eurostat and CNB calculations.
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For more details, see HNBlog, D. Kunovac and M. Luketina: The role of base effects in the slowdown of consumer inflation ↑