Central Bank says euro changeover had mild impact on inflation

According to the European Central Bank (ECB) and the Croatian Central Bank (HNB), the adoption of the euro in Croatia on 1 January has contributed relatively mildly to inflation and the changeover-related inflation in January and February was 0.4 percentage points.

The findings of the preliminary analysis, published in the blog headlined "Has the euro changeover caused extra inflation in Croatia?", show that the 0.4 percentage point increase is similar to the experience of other countries that switched to the euro before Croatia.

Preliminary evidence presented in the ECB blog post shows that the kuna-euro changeover has so far had relatively little impact on consumer prices and price perceptions.

January's inflation rates of goods' prices were in line with historical patterns over the last 10 years.

On the other hand, prices of services rose above the 10-year average.

"Looking more closely, the Harmonised Index of Consumer Prices (HICP) for January and February 2023 indicates that inflation in Croatia continued its moderating trend in annual terms, decreasing from 12.7% in December 2022 to 12.5% in January 2023 and 11.7% in February 2023. Month-on-month inflation was 0.3% in January 2023, which is less than in some other euro area countries."

"In February 2023, the month-on-month growth of Croatian HICP was 0.2%, one of the lowest increases across euro area countries. In addition, all HICP components, including services, displayed a month-on-month growth in line with past regularities."

All in all, the impact on consumer prices and price perceptions in Croatia coming on top of the general inflation trend seems to have been contained so far.