ZAGREB, 4 Nov (Hina) – Croatian National Bank (HNB) Governor Boris Vujčić said on Monday that it is still too early to declare inflation in the Eurozone defeated, mainly due to elevated service prices.

Vujčić made this statement at the Zagreb Financial Forum during a “1-on-1” interview with Poslovni dnevnik’s editor-in-chief Vladimir Nišević.

Asked if the Eurozone’s inflation could be considered defeated following the European Central Bankв’s (ECB) recent rate-cutting cycle, Vujčić replied that it is premature to make such conclusions. He noted, however, that inflation has slowed faster than expected, prompting the EC’s further rate cuts in October.

He emphasised caution, especially given the volatility of energy prices due to geopolitical tensions. Vujčić pointed out that attention should focus on core inflation, which remains elevated, particularly because of sustained high service prices. As long as this is the case, we cannot say inflation has been conquered,” he stated.

Inflation in Croatia peaked before euro adoption

Regarding inflation in Croatia, Vujčić highlighted that the rate measured by the Harmonized Index of Consumer Prices (HICP) remains high, influenced by foreign demand specifically, spending by foreign tourists, which has notably driven up prices in restaurants and hotels. However, inflation relevant to Croatian citizens, measured by the national consumer price index, has recently been below two per cent annually.

The governor reiterated that the introduction of the euro in Croatia had a relatively mild impact on inflation, between 0.2 and 0.4 percentage points, consistent with the experiences of other countries. Official inflation statistics are based on year-over-year comparisons, the primary reference for the central bank. However, Vujčić noted, that the public often perceives inflation cumulatively, recalling the lower prices of specific items from previous periods.

He reminded that Croatia’s highest inflation rates were recorded before adopting the euro, and that, since then, annual inflation has slowed almost every month. Among Central and Eastern European countries in the eurozone, only Slovenia has recorded a lower cumulative inflation rate than Croatia since joining the euro area.