Inflation at 3.9% in July, Retail Slows for Third Month Running
Spending rises just 0.4% year-on-year, fuel sales down 12.9%, and the Institute of Economics forecasts GDP growth of 2% in the second quarter.
Spending rises just 0.4% year-on-year, fuel sales down 12.9%, and the Institute of Economics forecasts GDP growth of 2% in the second quarter.
The Croatian Bureau of Statistics (DZS) published its first estimate of the consumer price index on Friday, 31 July 2026: annual inflation in Croatia fell to 3.9%, while prices fell by 0.2% on a monthly basis. At the same time, new data show that consumer spending is cooling, retail sales grew by just 0.4% compared to the same period last year, marking the third consecutive month of slowdown, reports the Rijeka-based daily Novi list.
According to the first estimate, the annual price increase was driven mainly by the Energy (12.2%) and Services (8.5%) components, while Food, Beverages and Tobacco rose a modest 0.5%. A decline was recorded in Industrial Non-food Products (excluding energy) (-1.1% year-on-year, and -3.0% month-on-month). On a monthly basis, Services rose 1.5%, and Food and Energy each rose 0.4%.
The Harmonised Index of Consumer Prices (HICP), used by Eurostat, was 3.6% higher in July on an annual basis, and 0.6% above June. The DZS will publish final data according to the ECOICOP classification on 14 August.
Real retail trade turnover in June, according to the DZS, rose by only 0.4% year-on-year, the 39th consecutive month of growth, but a sharp slowdown compared to March (3.3%), April (2%) and May (0.5%). Growth was strongest in food, beverages and tobacco (2.9%), non-food products recorded growth of 1.5%, while the category of motor fuels and lubricants plunged by as much as 12.9%.
"The category of motor fuels and lubricants, which recorded a steep decline of 12.9 percent year-on-year, has a significant direct impact on the slowdown of overall June retail," said RBA analysts for Novi list. High energy prices, they add, have forced citizens and companies to rationalise their consumption of petroleum products.
According to the European Commission's spring forecasts, in periods of economic uncertainty consumers delay purchases of durable goods and build up financial reserves. Novi list reports that inflation, which has "significantly eroded citizens' purchasing power," has also contributed to caution, households are spending an increasingly large share of their income on food and utilities.
Recall that two years ago Croatia had retail growth of 5.3%, driven by wage growth, so this year's cooling was expected. In the first quarter of 2026, GDP grew by 2.2% (the 21st consecutive quarter of growth), but that is notably slower than in the previous quarter (3.6%).
The Institute of Economics warns of further slowdown: "The described movement of the index suggests that economic activity in the Croatian economy is slowing slightly in the second quarter of 2026 compared to the previous quarter. Based on the movement of the index values, we can estimate that in Q2 2026 the Croatian economy will grow by 2 percent compared to the same quarter of the previous year." Only two components of the CEIZ index, the number of tourist arrivals and VAT revenues, recorded growth, while industrial production and retail trade fell.
