Consumer price inflation in Croatia might pick up to 2.3% in 2021 before slowing to 2.1% in 2022, the Croatian Central Bank (HNB) said on Wednesday.

Consumer price inflation for the whole of 2021 might pick up to 2.3%, from 0.1% in 2020, due to the increased annual rate of change of energy prices, notably prices of petroleum products. In 2022, inflation is expected to slow to 2.1% because of the lower projected rise in energy prices, the HNB said, adding that risks associated with the inflation projection are markedly negative and that inflation might be higher than forecast.

The central bank recalled that the annual rise in consumer prices had picked up from 2.8% in June to 3.1% in August, mostly as a result of the pick-up in the annual rise in food prices. Although core inflation slightly increased in August, it remained relatively low at 1.8%.

2021 GDP growth rate projected at 8.5%

A flash estimate of GDP shows that economic activity accelerated in the third quarter of this year compared with the previous quarter, mostly thanks to the tourism industry. As a result, the annual real GDP growth rate for the whole of 2021 is forecast at 8.5%, reflecting a strong rise in exports and domestic demand.

Lending still subdued

Although financing terms remain favourable, lending remains subdued in all segments except mortgage lending.

At the end of the third quarter, total exposure to systemic risks was reduced from a high to moderate level, the HNB said.