The services sector is the main driver of inflation in Croatia, and this trend could continue with the upcoming tourist season, the Governor of the Croatian National Bank (HNB) Boris Vujcic said on Tuesday.

Prices will rise as long as they do not encounter a downward shift in the demand curve, Vujcic said at a conference on Croatian financial institutions, sustainable financing and economic development in Zagreb.

The governor also noted that it is often forgotten that Croatia has the second lowest cumulative inflation rate in Central and Eastern Europe since the beginning of the inflation rise, after Slovenia, which has the lowest rate.

This means that inflation rates in Croatia have not yet reached the peaks registered in other countries in the region, the governor said.

Highest increase in consumer prices

Last week, the Croatian Bureau of Statistics (DZS) reported that the Croatian inflation rate, as measured by the consumer price index, was 4.1% in March 2024 compared to March 2023, while it increased by 0.9% compared to February 2024.

Croatia again recorded the highest increase in consumer prices among euro area countries in March 2024, while the euro area’s annual inflation rate fell slightly again, according to a flash estimate released by Eurostat, the statistical office of the European Union, last Wednesday.

In March 2024, the euro area’s annual inflation rate, as measured by the Harmonised Index of Consumer Prices (HICP), fell to 2.4% from 2.6% in February.

One of the reasons that had an impact on inflation in March was the increase in prices for services, which was primarily due to the good tourist pre-season and Easter, which declined this year, said Finance Minister Marko Primorac on this occasion.