Inflation in Croatia

A short history of inflation in Croatia

The Yugoslav Hyperinflation (1991 to 1993)

Croatia inherited an inflation already running when it declared independence in 1991, and the war that followed made it far worse. Fighting destroyed infrastructure and cut output while the government's costs rose, and the gap was financed by creating money. Prices were rising at a rate measured in thousands of per cent a year by 1993.

The Kuna and Stabilisation (1993 to 1994)

A stabilisation programme in October 1993 broke it within months, using the exchange rate as the anchor and restoring confidence quickly enough that inflation fell to low single figures in 1994. The kuna was introduced in May 1994 to replace the transitional dinar. Croatia kept inflation low for the following three decades and adopted the euro on 1 January 2023.

Post-Covid Inflation (2021 to 2023)

In Croatia, prices rose fastest in November 2022, at 12.9%. The causes of the post-Covid inflation were global in nature, beginning with the lockdowns: factories and ports closed and the shipping between them fell out of sequence, so goods took longer to make and longer to arrive. Governments had spent heavily supporting household incomes through those closures, so when restrictions lifted there was money waiting to be spent and not enough on the shelves to spend it on. Then in February 2022 Russia invaded Ukraine, disrupting two of the world's largest suppliers of wheat, fertiliser, oil and gas at once, and the cost of everything grown, heated or transported rose with them.

Because the causes were shared, so was the timing: most countries peaked within a few months of one another in late 2022. The major inflation events covers this episode and the others in more detail.