Bank Governor comments on inflation

Central Bank Governor Boris Vujčić said on Wednesday that Croatia's strong economic growth compared to some EU countries was, in part, fueling domestic inflation. 

The government's latest aid measures and their impact on inflation were commented on by Governor Vujčić at a conference in Slavonski Brod on Wednesday. Vujčić believes that the increase in energy prices will accelerate inflation, but not significantly, as the share of energy in total costs is between 6 and 7 %.

Due to strong economic growth in Croatia, he believes that it is logical for Croatia to have a higher rate of inflation than in the eurozone, and emphasized that the Croatian National Bank was actively implementing measures to curb price increases.

"Croatia is growing 3 to 4 times faster than the Eurozone. Between 2020 and 2024, salaries in Croatia increased by 30 percentage points faster than the EU average. Therefore, it is normal that the inflation rate is also somewhat higher," said Vujčić.

He added that according to the Bank's projections inflation will decrease by the end of the year and continue downwards in 2026 where the rate is expected to be 2.6 % on average. And only by the end of 2026 will inflation reach the desired rate of around 2%.