Overall inflation in July
According to a flash estimate, Croatia’s overall inflation measured by the harmonised index of consumer prices (HICP) slowed down to 3.6% in July 2026 from 4.2% in June (Figure 1 and Table 1), mostly due to further deceleration in the growth of food prices. The ceasefire and the relatively short-lived decline in energy prices in the run-up to the re-escalation of the conflict in the Middle East also contributed to the slowdown in overall inflation, albeit to a lesser extent. Core inflation (which excludes volatile energy and food prices) also fell to 3.4%, from 3.6% in June, reflecting a decrease in the annual rate of change in the prices of industrial goods, while services price inflation remained unchanged. Inflation measured by the national consumer price index (CPI), which reflects the structure of consumption of Croatian citizens, slowed down to 3.9% in July, from 4.5% in June. On the other hand, overall inflation (HICP) in the euro area sped up to 2.9% in July (from 2.8% in June), supported by all components except food, and the difference between inflation in Croatia and the euro area average decreased to 0.7 percentage points (from 1.4 percentage points in June).
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 last available data refer to the first estimate for July 2026.
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). Data are in line with ECOICOP 2 classification.
Sources: Eurostat and CBS.
Inflation components in Croatia in July
The deceleration in Croatia’s overall inflation measured by HICP in July largely reflects the strong slowdown in food price inflation, which dropped to its lowest level since the beginning of 2021. Food price inflation thus continued to trend down for the fourth consecutive month and stood at 0.7% in July, well below the level of 4.0% in March this year. As in the previous month, both its components (processed and unprocessed food) contributed to the slowdown. In addition, energy price inflation also slowed down in July (to 11.6%, from 12.9% in June), as retail refined petroleum prices still reflected, for a large part of the month, an earlier temporary decline in crude oil prices, while it was only towards the end of the month that the re-escalation of the conflict in the Middle East spurred the considerable rise in these prices. The contribution of energy to overall inflation, although slightly lower than in June, remained significant and stood at 1.4 percentage points. The slowdown in core and overall inflation in July was also due to the decrease in the annual rate of change in the prices of industrial goods, to –0.9% in July, from –0.3% in June, while services price inflation remained unchanged at 6.8%, after a slowdown in the previous two months. However, services have remained the component with the greatest individual contribution to overall inflation, contributing 2.2 percentage points to overall inflation of 3.6% in July.
The slowdown in CPI overall inflation in July reflects a decline in the annual rate of change in food prices, energy prices and industrial goods prices to 0.5%, 12.2% and –1.1%, respectively (from 1.8%, 13.2% and –0.6% in June). In contrast, services price inflation continued to accelerate and stood at 8.5% in July (relative to 8.1% in June). Services prices made the largest contribution to overall inflation in July (as in the harmonised indicator), while in June their contribution was the same as that of energy prices. As in the previous two months, the harmonised indicator of overall inflation was 0.3 percentage points lower than the national indicator in July, reflecting the differences in energy price contributions.
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 4.2% in June to 3.6% in July – 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 slowdown in overall inflation in July 2026 is due to negative current pressures across all components, as well as favourable base effects reflecting a noticeable increase in food prices in the same month of the year before (Figure 2).
Figure 2 Contribution of base effects and current developments to the change in the annual rate of overall inflation by months (left) and by components in July 2026 (right)
Note: 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.
Sources: Eurostat, CBS and CNB calculations.
- For more details, see HNBlog, Kunovac D. and Luketina M., "On the way down – the role of base effects in the slowdown of consumer inflation". ↑