The latest inflation data for Croatia (HR) released on December 2, 2025, shows the year-on-year (YoY) inflation rate at 3.80%, surpassing market expectations of 3.40% and edging up from November’s 3.60%. This figure, sourced from the Sigmanomics database, reflects a slight uptick after a downward trend from the 4.20% peak recorded in October 2025. The geographic scope covers Croatia’s national economy, with temporal focus on the latest monthly release and comparisons over the past six months and the preceding year.

Drivers this month

• Energy prices contributed 0.25 percentage points (pp), reflecting volatility in global oil and gas markets.
• Food inflation remained steady, adding 0.15 pp, driven by supply chain constraints.
• Core services inflation increased by 0.10 pp, indicating persistent domestic demand pressures.
• Used car prices and durable goods exerted a mild downward drag (-0.05 pp).

Policy pulse

The 3.80% inflation rate remains above the Croatian National Bank’s (HNB) target range of 2.00% ±1.00 pp, signaling ongoing inflationary pressures. The central bank has maintained a tightening bias, with recent hikes in policy rates aimed at anchoring inflation expectations. This print suggests that while inflation is moderating from mid-year highs, it remains sticky, warranting continued vigilance.

Market lens

Immediate reaction: The HRK currency appreciated modestly by 0.30% against the euro within the first hour post-release. Short-term government bond yields rose by 5 basis points, reflecting a slight repricing of monetary policy expectations. Inflation-linked breakeven rates held steady, indicating market confidence in medium-term inflation control.

Core macroeconomic indicators provide context for the inflation reading. Croatia’s GDP growth for Q3 2025 was 2.10% YoY, down from 2.50% in Q2, signaling a mild slowdown. Unemployment remains low at 6.20%, supporting wage growth and domestic demand. The labor market tightness contributes to upward wage pressures, feeding into service sector inflation.

Monetary Policy & Financial Conditions

The Croatian National Bank has increased its key policy rate by 75 basis points since June 2025, reaching 3.25% in November. This tightening cycle aims to curb inflation without derailing growth. Credit growth has slowed to 4.50% YoY from 6.00% earlier in the year, reflecting tighter financial conditions. The HRK’s modest appreciation supports import price stability.

Fiscal Policy & Government Budget

Fiscal consolidation efforts continue, with the government targeting a deficit reduction to 2.80% of GDP in 2025 from 3.50% in 2024. Public spending restraint and improved tax collection underpin this effort. However, social spending pressures and energy subsidies remain potential inflationary risks.

External Shocks & Geopolitical Risks

Energy price volatility linked to Eastern European geopolitical tensions remains a key external risk. Croatia’s energy import dependence exposes it to supply disruptions and price spikes. Additionally, global supply chain disruptions and inflationary spillovers from the Eurozone affect domestic price dynamics.

Market lens

Immediate reaction: Following the print, Croatian government bond yields rose modestly, reflecting increased inflation risk premium. The HRK strengthened slightly, indicating market confidence in the central bank’s policy stance. Inflation-linked securities remained stable, suggesting expectations of medium-term inflation control.

Looking ahead, inflation in Croatia faces a complex interplay of domestic and external factors. The baseline scenario projects inflation easing gradually to around 3.00% by mid-2026, assuming continued monetary tightening and stable energy prices. This scenario carries a 55% probability.

Bullish scenario (30% probability)

• Energy prices decline sharply due to eased geopolitical tensions.
• Supply chain improvements reduce food and goods inflation.
• Monetary policy successfully anchors inflation expectations, allowing rate cuts by late 2026.
• Inflation falls below 2.50%, boosting real incomes and consumption.

Bearish scenario (15% probability)

• Geopolitical shocks escalate, driving energy prices above current levels.
• Wage pressures intensify amid labor shortages.
• Fiscal stimulus increases, adding demand-side inflationary pressures.
• Inflation remains above 4.00%, forcing aggressive monetary tightening and risking growth slowdown.

Risks to the outlook include global commodity price volatility, Eurozone inflation spillovers, and domestic wage dynamics. Policymakers must balance inflation control with growth support amid these uncertainties.

In summary, Croatia’s inflation rate of 3.80% YoY in December 2025 signals persistent but manageable inflation pressures. The slight rebound from November’s 3.60% reflects external energy shocks and domestic demand resilience. Monetary policy remains appropriately restrictive, but vigilance is needed given geopolitical risks and fiscal policy constraints.

Structural trends such as labor market tightness and energy import dependence will continue shaping inflation dynamics over the medium term. Financial markets have so far digested the data without major disruption, but inflation-linked instruments and currency movements warrant close monitoring.

Overall, the inflation outlook is cautiously balanced, with a moderate disinflation path likely barring adverse shocks. Policymakers and investors should prepare for volatility while focusing on structural reforms to enhance economic resilience.

Key Markets Likely to React to Inflation Rate YoY

Croatia’s inflation rate influences multiple asset classes, particularly those sensitive to interest rates, currency strength, and economic growth expectations. The following five tradable symbols historically track inflation dynamics or react to central bank policy shifts in Croatia and the broader region:

• ZABA: Zagrebačka banka, Croatia’s largest bank, sensitive to interest rate changes and credit growth affected by inflation.
• EURHRK: The euro to Croatian kuna exchange rate, directly impacted by inflation and monetary policy differentials.
• ADPL: AD Plastik, a major Croatian industrial exporter, whose costs and pricing power are influenced by inflation.
• BTCUSD: Bitcoin, often viewed as an inflation hedge and alternative asset during inflation uncertainty.
• USDEUR: The US dollar to euro pair, reflecting broader Eurozone inflation trends that impact Croatia’s economy.

FAQs

What is the current inflation rate YoY for Croatia?

The latest inflation rate for Croatia is 3.80% year-on-year as of December 2025.

How does Croatia’s inflation compare historically?

Inflation peaked at 4.20% in October 2025, with the current 3.80% marking a slight rebound after recent declines.

What factors drive Croatia’s inflation?

Key drivers include energy prices, food costs, wage growth, and external geopolitical risks affecting supply chains.

Takeaway: Croatia’s inflation remains elevated but shows signs of moderation. Policymakers face a delicate balance amid external shocks and domestic pressures, with financial markets poised for cautious adjustments.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.