Saturday, 18 March 2023

Croatia Inflation Rate for February Still in Double Digits

March 18, 2023 - Inflation in the Eurozone weakened slightly in February, the European Statistical Office confirmed on Friday, and price increases saw a slight slowdown in the European Union as well. The Croatia inflation rate for February, though, still placed the country among the Eurozone countries with a double-digit rate.

As Index writes, Eurostat confirmed the estimate of 8.5 percent growth in consumer prices in the eurozone in February, expressed by the harmonized index of consumer prices (HICP). In January, they increased by 8.6 percent.

Rising food and energy prices have been the main drivers of price growth

At the monthly level, consumer prices increased by 0.8 percent compared to January, when there was a decrease of 0.2 percent, Eurostat confirmed.

The main driver of price growth was the increase in food and energy prices. At the EU level, the harmonized index of consumer prices showed their growth in February of 9.9 percent compared to the same month last year, after a 10 percent increase in January.

On a monthly basis, prices rose by 0.8 percent in February, after a 0.2 percent increase in the first month of this year.

Croatia in the group of Eurozone countries with a double-digit inflation rate in February

Among EU countries that are not members of the eurozone, prices in Hungary increased by far the most on an annual basis, by 25.8 percent compared to last year's February. In Poland, the largest economy in that group, the prices increased by 17.2 percent according to preliminary data.

Among the eurozone members, the highest inflation rates were recorded by the Baltic countries, so in Latvia it was 20.1 percent, and in Estonia and Lithuania 17.8 and 17.2 percent, respectively.

Croatia is also in the group of eurozone countries with a double-digit inflation rate in February, at 11.7 percent, as indicated by the harmonized consumer price index.

For more, make sure to check out our dedicated News section.

Monday, 17 October 2022

IMF Predictions Not Fantastic, What Awaits Croatian Economy?

October the 17th, 2022 - The International Monetary Fund (IMF) has released its predictions amid ongoing inflation, the Ukraine-Russia war and spiralling energy prices during the post-pandemic period. What precisely awaits the Croatian economy according to their predictions?

As Poslovni Dnevnik writes, the main problem that is currently being experienced on a huge scale is that this current economic slowdown is very widespread. A third of the global economy could end up having to record a "technical recession", which is equal to two consecutive quarters of contraction of economic activity,'' Croatian economist Matej Bule from the Croatian National Bank told the Croatian Radio network.

''An additional problem is that that same economic slowdown is simultaneously being accompanied by very strong inflationary pressures,'' he pointed out, adding that the Republic of Croatia is currently handling it better than some other comparable countries, which might come as a surprise to those who feel that their pockets and bank accounts are taking hit after expensive hit.

 "Everything is currently heading in the direction of normalising these inflationary pressures"

"We had double-digit growth back in 2021, in 2022, growth of 5.6 percent is expected for the Croatian economy, but for 2023, all relevant institutions expect a strong slowdown for the economy," he said, adding that growth of a mere 1 percent is expected next year.

He also stated that the movement of inflation will depend on a number of factors, and one of the most important things is that we'll have to keep a close eye on the movement of the prices of raw materials on the global market.

For more on the Croatian economy and ongoing inflation, make sure to keep up with our dedicated news section.

Sunday, 18 September 2022

Intensity of Croatian Inflation Calms Gradually Over 4 Month Period

September the 18th, 2022 - Croatian inflation might still be hitting bank accounts and back pockets hard, and while it might not seem like it to the average consumer, it has gradually been calming down consistently over a four month period.

As Poslovni Dnevnik writes, food and home equipment, along with items for household maintenance, were at the very ''front'' when it comes to price growth on a monthly basis in August compared to July, according to a recent Vecernji list report on the topic.

Food and home furnishings rose in price by 1.7 percent in one month, while restaurants and hotels came in third place with a mere one percent price increase.

The annual inflation rate has as such remained at a high double-digit figure of 12.3 percent during the second summer month, but the price growth at the monthly level still slowed down to just 0.1 percent.

In August this year, the first stronger price reductions were recorded in two groups, they were transportation costs which decreased by around 4 percent due to reduced fuel prices and clothing and footwear which decreased in price by 3 percent, meaning that the overall result on a monthly level brought with it a plus of 0.1 percent.

The good news is that the intensity with which Croatian inflation is ravaging the country and its pockets is actually decreasing for the fourth month in a row now. Cumulatively, in the first eight months of this year, the consumer price index was 9.5 percent higher when compared to the same period last year.

If you look at the European Union as a whole, the biggest summer price shock happened in neighbouring Hungary, where the annual inflation rate stands at almost 19 percent, and in August alone, the price jump was a significant 3.7 percent. Inflation accelerated in August in both the Eurozone (9.1 percent) and across the European Union (10.1 percent), with prices falling in twelve member states and further price increases occurring in fifteen of them on a monthly basis.

Food has been the leader of growth almost everywhere, with the fact that at the level of the European Union, the increase in the price of food items on an annual level stood at 10 percent, and when it comes to Croatian inflation specifically, it was twice as strong, standing at 19.2 percent.

Restaurants and hotels rose in price by 17.6 percent, furniture, home equipment and regular household maintenance rose by 15.3 percent, transportation and associated costs rosr by 14 percent. Housing, water, electricity, gas and other fuels were more expensive by a considerable 10.5 percent, recreation and culture by 9.4 percent, various goods and services by 8 percent, and clothing and footwear by 6.4 percent, as reported by Ljubica Gataric/Vecernji list.

For more, make sure to check out our dedicated lifestyle section.

Friday, 6 May 2022

HNB Governor: Inflation Has Not Reached its Peak Yet

ZAGREB, 6 May (2022) - Addressing a traditional conference of regional central bank governors in the northern Adriatic town of Rovinj on Friday, Croatian National Bank (HNB) Governor Boris Vujčić said that all central banks have revised down their growth projections for this year and that inflation has not yet reached its peak.

Last month, the HNB revised its growth projections for this year, forecasting real GDP growth of 3.2%, down from its previous projection of 4.1%, on the assumption that the war in Ukraine does not last long and energy prices gradually return to normal.

The HNB estimates that inflation would average 5.4% in 2022, after reaching 2.6% in 2021.

The government recently also revised its growth forecast for 2022 from 4.4% to 3.0% and an inflation rate of 7.8%.

"At the moment consumption is still good. We haven't seen it slow down. Inflation will continue to increase and this isn't the peak yet. We are still waiting for April figures. What will happen later depends on the development of the war. However, the war has not had much of an impact on us as yet. Nevertheless, the longer it lasts the deeper the cumulative effects will be," Vujčić said in his address to the conference of regional central bank governors, organised by the Lider business weekly.

He added that when inflation increases above 5.0% it starts to affect expectations and spreads among more and more groups of products. In Croatia we have witnessed an increased number of products whose price has increased by more than 5.0%, he said.

"We cannot make any real forecasts and everything depends on energy prices. However, the inflation has nothing to do with the adoption of the euro as legal tender, as other factors are affecting price trends more," he said.

The regional bank governors talked about the repercussions of the conflict between Russia and Ukraine and the resolution of Sberbank, with Vujčić saying that even though Croatia is the youngest EU member state it managed to convince Brussels of a resolution plan outlining what should be done with subsidiary banks if the "mother bank goes into liquidation."

"Sberbank turned out to be a good precedent for future cases in Europe and there will certainly be more," Vujčić noted.

North Macedonia's central bank governor Anita Angelovska Bezhoska said that Europe expects slower growth this year and next.

Bosnia and Herzegovina's Senad Softić said that his country needs to revise some parameters due to the war and inflation but that the banking sector in Bosnia and Herzegovina is stable.

Slovenia's central bank governor Boštjan Vasle said that the Slovenian economy grew faster than the European average due to its milder epidemiological restrictions during the pandemic. He said that the two main growth drivers were exports and increased consumption. "Our current forecast is not that optimistic, but consumption is still strong," he added.

Adrović: Intensive preparations to introduce euro currency

The President of the Croatian Banking Association, Zdenko Adrović, said that Croatia is intensively preparing for the introduction of the euro.

"The threatening inflation and potentially increased interest rates raise new issues for monetary policies and banks. But that is not all because all this is happening when Croatia is intensively preparing to introduce the euro as legal tender. Banks have a huge role in the entire process and that is why it is the main issue this year," Adrović said, adding that the time frame was too short.

"Croatia will become a state with the shortest deadline to introduce the euro since joining the ERM II mechanism."

The good news is that prices in the country are already tightly connected with European prices, hence entry to the euro area is a logical economic and political choice for the country that is largely eurorised anyway, Adrović said.

For more, check out our politics section.

Friday, 15 April 2022

Croatia's Inflation Picks Up to 7.3% in March, Highest Since Summer 2008

ZAGREB, 15 April (2022) - Prices of goods and services for personal consumption, measured by the consumer prices index, in March 2022 were on average 7.3% higher than in the same month of last year, the Croatian statistical office (DZS) said on Friday.

That is the highest inflation rate since the summer of 2008.

Compared to February 2022, consumer prices were 2.1% higher on average.

In Q1 2022, consumer prices were on average 6.4% higher than in Q1 2021.

Food prices, which also include prices of non-alcoholic beverages and which account for one quarter of the market basket, have increased by 10.3% year-on-year, contributing the most to the annual index growth rate (+2.8%).

As expected, transport prices grew the most, by 14.4%, primarily due to fuel prices, contributing 2.12 percentage points to the index growth rate, while prices of accommodation, water, electricity, gas and other fuels increased by 3.8%, contributing 0.64 pp.

Compared to February, prices of clothing and footwear grew the most (+12.2%), followed by transport prices (+5.3%), and restaurant and hotel prices (+1.8%).

The inflationary pressure caused by energy and food price growth has grown stronger due to current geopolitical conflicts and the uncertainty regarding their duration and outcome, and even though the government has taken certain steps to alleviate the impact of rising energy prices on consumers, a direct spillover effect of rising energy and food prices on global markets is inevitable, analysts at Raiffeisen Bank said in their comment on the DZS report.

For more, check out our business section.

Friday, 25 March 2022

Croatian National Bank Governor: Ukraine War to Slow Croatia's GDP Growth and Push up Inflation

ZAGREB, 25 March (2022) - The war in Ukraine will certainly lead to an economic slowdown in Croatia this year and push up inflation, largely due to increases in energy and cereal prices, Croatian National Bank (HNB) Governor Boris Vujčić said on Friday.

"The direct impact on our economy comes from the spillover of economic effects of the war in Ukraine. At this moment we do not have direct consequences of the war, but we can quite certainly expect that the war in Ukraine will slow our GDP growth this year and increase inflation, primarily because of increased prices of energy and cereals that are largely produced in Russia and Ukraine," Vujčić told a press conference.

He added that the scale of the impact would depend on developments in Ukraine, "which at this point are hard to predict."

Rush for euro

Asked to comment on "the rush for euro", after exchange offices have been reported by the media as saying that they sell all the euros they get, Vujčić said this was nothing of significance.

He said there had been an increased demand for euro since the second half of last year due to last year's much better tourist season and the nearing of the date of euro adoption by Croatia.

According to the central bank, there was a strong increase in foreign currency deposits with commercial banks in January, picking up from 2.2 to 6.6 per cent at an annual level.

"This trend shows a strong net inflow of foreign currency into the banking system," Vujčić said.

For more, check out our business section.

Saturday, 26 February 2022

Croatian Inflation: CBS Announces Highest Price Increases in 13 Years

February the 26th, 2022 - The Central Bureau of Statistics (CBS) has announced that Croatian inflation is resulting in the highest price increases in thirteen years, with no improvement on the horizon to speak of as the Eurozone experiences the same, energy prices continue to soar and Russia invades Ukraine.

As Novac/Jutarnji/Gojko Drljaca writes, the Central Bureau of Statistics (CBS) finally released Croatian inflation data for the month of January 2022 on Thursday, which went unnoticed due to the horrendous and unjustified Russian attack on Ukraine, although prices did continue to rise significantly. In January 2022, prices were 5.7 percent higher than in the same month back in 2021.

However, despite the somewhat longer wait for Croatian inflation data compared to more advanced countries, new CBS statistics confirmed what we already suspected in January: the key cause of rising prices across Croatia is now not only the sky high global energy prices but also transport prices (growth in January +10.8 percent), food and non-alcoholic beverages (+9.4 percent), alcoholic beverages and tobacco (+6.2 percent), furniture, household equipment and household maintenance costs (+5.0 percent) and at restaurants and hotels (+ 4.7 percent).

Of particular concern is the data on rising food and non-alcoholic beverage prices and transport, as these are costs that the poorest of the country's families and households cannot avoid at all. The same is a growing concern in regard to housing, water and electricity costs, which rose by a significant 2.7 percent in January alone. It is now obvious that an inflationary spiral is being created here in Croatia, as it is in other European Union (EU) member states.

On a monthly basis, the highest growth of 2.9 percent was recorded in food and non-alcoholic beverages. The only significant drop in prices as Croatian inflation causes more and more worry was recorded in the group of clothing and footwear (-12.9 percent), which indicates possible problems being experienced by that business. Namely, it seems that some consumers with lower purchasing power must already be planning to give up.

Although the data being released by official bodies on Croatian inflation is beginning to sound a bit dramatic, the Croatian economy is still right in the middle of the EU inflation average, which offers a certain degree of comfort. In January in the EU, the highest inflation was recorded in the Czech Republic (+8.8 percent), Estonia (+11 percent) and Lithuania (+12.3 percent). The most stable prices could be found in Sweden (+3.9 percent), Portugal (+3.4 percent) and France (+3.3 percent).

Given that the Republic of Croatia is one of the poorest member states of the EU, even average European Union inflation will be a significantly bigger economic and social problem for it, because both theoretical and empirical price increases hit the poorest the hardest. Of particular concern is the fact that the war in Ukraine will certainly have a pro-inflationary effect across all EU member states.

Eurostat officially released Croatian inflation data on February the 17th, with projections released in the first week of February. It is unclear whether, after entering the Eurozone, the CBS will adjust to the speed of other statistical institutions across the European Union.

For more, check out our lifestyle section.

Friday, 21 February 2020

Croatia's Annual Inflation Reaches 2.0% in January

ZAGREB, February 21, 2020 - Croatia's annual inflation rate, as measured by the consumer price index, was 2.0% in January 2020, the National Bureau of Statistics (DZS) said on Friday.

The annual rise in consumer prices was mostly driven by the rise in transport prices (+4.9%), on the back of the rise in prices of fuels and lubricants for passenger vehicles (+9.8%). This was the result of a considerable drop in prices of Brent crude oil at the end of 2018, analysts at Raiffeisen bank (RBA) said.

Compared with January 2019, prices of food and soft drinks increased by 3.4%, with prices of meat going up by 8.6% and those of fruit by 11.7%. Prices of housing, water, electricity and gas were 1.6% higher and those of hotel and restaurant services were up 2.7%.

Year on year, consumer prices rose, albeit at a slower rate, in all other categories except recreation and culture, which recorded a decrease of 0.4%.

Excluding energy, consumer prices increased by 1.6% overall, and without energy and food, they were 0.7% higher.

Compared with December 2019, consumer prices fell by 0.3% on average.

More economy news can be found in the Business section.

Friday, 16 August 2019

July Inflation Rate up to 1.1%

ZAGREB, August 16, 2019 - Consumer prices in Croatia in July this year were 1.1% higher than in July 2018, and inflation this July was higher than in June, when it stood at 0.6%, the national statistical office (DZS) said on Friday.

The 1.1% year-on-year increase in consumer prices is the highest since November 2018, when inflation stood at 1.3%.

Prices of alcoholic drinks and tobacco saw the highest year-on-year increase in July, of 5%, followed by prices of housing, water, electricity, gas and other energy products, which rose by 3.9%.

On the other hand, prices in the health segment and prices of transport both dropped by 1.1% on the year, with prices of petrol going down 1.9%.

Month-on-month, consumer prices in July dropped by 0.5% on average, with prices of clothing and footwear dropping the most, by 11.8%, owing to seasonal discounts.

On the other hand, restaurant and hotel prices grew the most on the month, by 1.6%, followed by prices of recreation and culture, which rose by 1.2%.

In the first seven months of this year, consumer prices were 0.7% higher than in the same period last year.

"In general, the level of prices in Croatia is at 68% of the EU28 average. Prices of food and non-alcoholic drinks account for 97% of the EU average, while prices of electricity, gas and petrol account for only 65% of the EU average," analysts of Raiffeisenbank Austria have said.

The analysts expect that the inflation rate in this and coming years should be moderate and stay below 2%.

More economic news can be found in the Business section.

Wednesday, 15 May 2019

Inflation Rate Slows Down to 0.7% in April

ZAGREB, May 15 (Hina) - Consumer prices in April 2019 were 0.7% higher than in the same month of 2018 and 0.6% higher than in the previous month, the national statistical office (DZS) said on Wednesday. This is a slower monthly and annual inflation rate considering that in March consumer prices grew by one percent from February, with the annual inflation rate in March being 0.9%.

DZS figures show that prices of alcohol and tobacco saw the highest annual increase, of 4.8%, followed by prices of housing, water, electricity, gas and other fuels, which went up by 3.9%.

Prices of transport grew by an average 2.8% from April last year. Prices of restaurant and hotel services rose by 3.2%, and prices of recreation and culture went up 1.1%.

Prices of food and non-alcoholic beverages, which have the largest portion in the structure of consumer prices, of 27.8%, dropped by 1.7%. Prices of fruit dropped the most on the year, by 16.3%, followed by prices of meat, which fell by 3.1%.

Earlier this year the VAT rate for a number of food products was lowered from 25% to 13%.

Prices of clothing and footwear dropped as well, by 3%, while prices of healthcare services and communications declined by 1.3% and 0.4% respectively.

Month-on-month, consumer prices grew for the third consecutive month, going up in April by 0.6% from March.

Analysts at Raiffeisenbank Austria said that the statistics indicated that future inflation trends would be determined by energy and food prices, with energy prices depending on trends on world commodity markets.

"Inflation will remain moderate this year again and we expect an average annual inflation rate of around 1% in 2019," the analysts said.

More news about inflation in Croatia can be found in the Business section.

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