Croatia records 2nd highest inflation driven by rising food prices

Split

ZAGREB, 4 August 2025 – Inflation in Croatia slightly accelerated in July, mainly due to a sharp rise in food prices, according to a commentary released by the Croatian National Bank (HNB) on Friday.

The overall inflation rate, measured by the Harmonised Index of Consumer Prices (HICP), rose to 4.5 percent in July, up from 4.4 percent in June. The HNB stated that this increase was primarily driven by a strong acceleration in food prices, with a smaller contribution from higher industrial goods prices.

Food price inflation jumped to 7 percent in July, compared to 5.7 percent in June. This rise is partly attributed to previous increases in the cost of food commodities and labour.

In contrast, energy price inflation slowed to 2.6 percent from 2.9 percent in June. This decline reflects falling global oil prices, which, after a short-term increase in June, led to lower fuel prices in July.

Service price inflation also dropped significantly, from 7.5 percent in June to 6.6 percent in July. Despite a rise in industrial goods inflation, this contributed to a decline in core inflation, which fell to 3.8 percent from 4 percent the month before.

As a result of the slowdown in service inflation, its contribution to the overall inflation rate fell to 2.1 percentage points. At the same time, the contribution of food prices increased to 2 percentage points.

Inflation in the euro area remained stable at 2 percent in July, the same as in June. This means the gap between Croatia’s inflation and the eurozone average widened slightly. Croatia recorded the second-highest inflation rate in the euro area, behind Estonia and alongside Slovakia.

Data from the Croatian Bureau of Statistics shows that inflation measured by the national Consumer Price Index (CPI) also increased, from 3.7 percent in June to 4.1 percent in July. The CPI does not include spending by foreign tourists or institutional households such as schools, hospitals, and religious organisations.

According to the HNB, food prices were again the main driver, with inflation rising from 5.2 percent in June to 6.6 percent in July. Industrial goods prices also showed a slight increase, rising from minus 0.4 percent to 0.4 percent year on year.

Meanwhile, service inflation slowed to 5.7 percent from 6.7 percent, and energy prices decreased to 2.3 percent from 2.8 percent. Services contributed 1.5 percentage points to overall inflation, while food prices contributed 2.1 percentage points.

The difference between the harmonised and national inflation rates narrowed from 0.7 percentage points in June to 0.4 percentage points in July. The higher HICP rate is largely due to a greater contribution from service prices, especially accommodation and hospitality, which tend to rise more during the tourist season and have a larger weight in the harmonised index because it includes foreign tourist spending.

However, the narrowing of this gap in July was mainly due to a reduced contribution from industrial goods and food prices, both of which had a negative or less positive impact compared to the previous month.