May the 20th, 2025 – Croatian prices in restaurants in hotels, as well as for food, remain the strongest generators of inflation.
As Sinisa Malus/Poslovni Dnevnik writes, according to the final data released by the CBS recently, with an increase of 0.6 percent compared to March, the annual growth rate of consumer prices in April remained at the March level of 3.2 percent (according to the national consumer price index).
Compared to the first estimate, the annual growth rate was revised up by 0.1 percent. Core inflation (which excludes the prices of energy, food, beverages and tobacco) accelerated from 2.9 percent in March to 3.2 percent in April on an annual basis.
When looking at the situation on a monthly basis and according to the primary index components, during April, price increases were recorded in industrial non-food products excluding energy (+1.7%), services (+0.8%) and food, beverages and tobacco (+0.4%). A price decrease was recorded only in energy (-0.8%).
Looking at it all on an annual basis, the average price of services continued to record relatively strong growth. Compared to April last year, prices in this category are now 6.1 percent higher. RBA analysts estimate that they contributed more than 1.59 percent to the annual Croatian inflation rate. This was followed by the increase in prices in the Food, Beverages and Tobacco category, where the estimated annual rate of change stood at a significant 4.1 percent.
Given its importance in the total consumption of the average household, its contribution to the total growth of the average annual consumer price inflation in April was 1.3 percent. Therefore, the two categories under consideration (services and food) contributed the most to the growth of consumer prices in April. This was very much the case throughout the the first quarter of 2025, as well as over the entire past year.
Industrial non-food products excluding energy recorded a slight increase of 0.3 percent. After recording an average price decrease from June to November 2024, energy recorded a positive change for the fifth month in a row, amounting to 1.1 percent in April compared to the same month in 2024. This was also the result of the adjustment of administratively determined prices in households.
The continuation of price pressures in the service sector has also been heavily associated with a further increase in Croatian restaurant and hotel prices (+8.7%). Given the impending arrival of the summer tourist season, it’s now clear that prices could continue to rise in the short term.
“Despite the relative annual slowdown, Croatia is continuing to experience structural inflationary pressures, supported by strong wage growth, fiscal expansion and growing domestic demand. Inflation related to services is likely to remain elevated as the country enters the peak of the summer tourist season,” warn Intercapital analysts.
Nevertheless, further annual growth was also recorded. This occurred in the categories of Miscellaneous goods and services (+5.6%), Housing, water, electricity, gas and other fuels (5.6), Education (+5.3%), Recreation and culture (+5.9%), Health (+5.0%), and Food and non-alcoholic beverages (+4.5%). On the other hand, prices were lower in the category of Communication (-0.4%, a decline for the eighth month in a row), as well as in the prices of Clothing and footwear (-0.7%) and finally in the prices of Transport (-1.8%).
Over the period from January to April, consumer prices were higher by an average of 3.5 percent per year. In the observed period, services and food contributed the most to the increase (almost 85% of the total increase).
RBA analysts warn that there are risks regarding the inflation forecast until the end of this year. “With the gradual continuation of the slowdown of inflationary pressures, we expect that the average annual inflation rate (IPC) in 2025 will amount to 2.6 percent. Our estimate doesn’t anticipate supply-side shocks, but is still exposed to risks of being slightly higher. We can’t rule out the possibility that service inflation will prove to be more stubborn, and the government will decide to adjust the administratively determined prices of goods and services to higher levels in autumn,” the RBA analysts conclude.
