Inflation woes weigh heavily across Croatia
High inflation rates continue to increase the cost of living for Croatians, impacting almost all sectors. The most recent data shows that Croatia has the highest rate of inflation in the Balkans.
Estimates from the Statistical Office show that inflation in January drove average consumer prices up by 4% compared to last year. Croatian consumers saw their average service costs soar by 6.3% compared to last January, while prices for food, beverages, and tobacco rose by 4.7%, energy costs increased by 4.5%, and non-food industrial goods (excluding energy) were up 0.5%.
Economic analyst Velimir Šonje says that these recent inflation trends seem to originate from uniquely domestic factors, and have drifted away from regional trends:
”The trend of price moderation in Croatia was present until last autumn, but since then the Croatian lines have diverged upwards. Unlike the bell-shaped trend that marked the period from mid-2021 to mid-2024, and which in Croatia was similar in shape to the euro area, we have now entered a phase of divergent local price trends that point to the operation of specifically domestic inflation factors,” Šonje explains.
Although the inflation rate dropped significantly to an average of 3% in 2024, down from 10.8% in 2022 and 8% in 2023, Croatians are still feeling the squeeze at the grocery store. Encouraging new investments and balancing demand could help stabilize prices, but food inflation remains a key concern.
When inflation in food outpaces that of other goods, its impact is felt unevenly. Wealthier households may perceive lower inflation than the official rate, while poorer households, where food makes up a much larger share of expenses, bear the brunt of rising costs.
Beyond the numbers, inflation perception is shaped by psychology. People tend to notice price hikes far more than price drops. If a regularly purchased item gets more expensive, we feel it immediately. But when another product quietly becomes cheaper, it often goes unnoticed.
Klara Vlahcevic Lisinski contributed to this article.