Page 63 - bne IntelliNews Southeastern Europe Outlook 2025

4.4 Inflation & Monetary Policy – Croatia
Croatia's inflation rate is expected to continue to moderate compared to previous years. The Croatian National Bank (CNB) forecasts average annual consumer price inflation to decline from 8.4% in 2023 to 3.9% in 2024, with further reductions projected at 3.4% in 2025 and 2.3% in 2026. This trend is driven by easing energy and food prices, alongside the normalisation of supply chains.
The International Monetary Fund (IMF) predicts inflation in Croatia to gradually approach the European Central Bank's (ECB’s) 2% target by late 2025. In its analysis, the IMF highlighted that Croatia’s inflation trajectory benefits from falling imported inflation, a significant factor given the country's reliance on trade with the EU.
As a member of the euro area since January 2023, Croatia operates under the ECB's monetary policy framework, which aims to maintain price stability across the eurozone. While the CNB no longer controls interest rates or currency policy, it continues to monitor financial stability and employs macroprudential measures to mitigate risks, especially within the banking and real estate sectors.
Croatia’s inflation peaked in early 2023 due to soaring energy prices but has since eased as global energy markets stabilised. Core inflation remains a concern, with some underlying price pressures persisting in services and non-energy goods. Analysts also caution that a sharp rise in wages could reignite inflationary pressures, creating challenges for households and businesses alike.
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