While the euro brings clear benefits for Croatia and its economy, some consumers have expressed concerns about possible additional price increases following the changeover from the national currency to the euro.
Looking more closely, the Harmonised Index of Consumer Prices (HICP) for January and February 2023 indicate 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 order to quantify the effect of the euro changeover, we assumed a
hypothetical month-on-month growth rate of HICP services in January 2023 in line with the average over the period 2013-2022. According to this preliminary exercise, annual headline inflation in Croatia should have been 0.4 percentage point lower than the actual figure. In a context of higher underlying inflation compared to previous years, this early estimate marks an upper bound for the impact of the euro changeover on prices and is consistent with those from studies on previous euro changeovers. As was the case in other countries, the effect of the changeover from the national currency to the euro on consumer price inflation was generally mild, one-off and concentrated in the services sector. - ECB
Comments