The latest Eurostat data show that Croatia recorded the largest drop in retail sales in the European Union in July.

While the volume of sales in the eurozone fell by half a percent, and in the whole Union by 0.4 percent, in Croatia that decline amounted to as much as four percent, writes Danica.hr. Particularly striking is the fact that this happened in July, the first month of the main tourist season, when increased spending is usually expected.

Besides Croatia, a significant decline was also recorded in Estonia, at two percent, and in Germany, where the decline amounted to 1.5 percent. On the other hand, a positive trend was achieved in Lithuania, Latvia, and the Netherlands, which recorded growth between one and one and a half percent. The data indicate different trends among member states, but it is clear that Croatia leads in the negative result.

The year-on-year comparison shows that the total volume of retail sales in Croatia still recorded slight growth of 1.4 percent. The largest annual jump was recorded by Cyprus with 8.5 percent, Portugal with 6.1 percent, and Bulgaria with six percent. The only country that recorded a decline on an annual basis was Slovenia with 0.7 percent. Croatia thus stands between a positive annual trend and a strong monthly decline.

Inflation remains a particular challenge. Croatia is among the countries with the highest annual inflation rates in the European Union. In August, inflation amounted to 4.6 percent, which is 0.2 percent higher than in July. Only Estonia had higher inflation, at 6.2 percent. These data point to continued pressure on consumers and retailers, which also explains the drop in spending during the summer months.

Sales and price trends in Croatia in 2024 and 2025.

In 2024, inflation eased compared with the previous year. According to the national consumer price index, the average for the whole year was around three percent, while the harmonized index for comparison with the European Union was around four percent. This is still an elevated environment, but significantly lower than in 2023.

The start of 2025 was marked by double-digit nominal wage growth, along with visible real growth in the first half of the year. Average gross wages were about eleven percent higher compared with the same period last year, and average net wages grew by around nine to ten percent, with inflation eating away part of that nominal growth.

Consumption fluctuated during the spring. In June, Croatia had strong monthly retail sales growth, followed by a pronounced decline in July. Such a pattern points to volatility, not continuous weakening. On a monthly basis, Croatia recorded an increase in retail sales volume in June, and in July a decline of four percent, while at the same time the eurozone recorded a decline of half a percent, and the European Union a decline of four tenths of a percentage point. Year-on-year, Croatia was still in positive territory in July.

Price pressures remained visible in the middle of the year. Harmonized inflation in August amounted to around four and a half percent, with the fact that it was among the higher rates in the European Union, while the national indicator was lower because it does not include the same basket of consumption. Services made a pronounced contribution to the overall rate during the summer, while food inflation gradually eased compared with the peaks of previous periods.

The car market shows a different picture from the perception of a general decline. Although some months can be weaker, the number of first registrations of new passenger vehicles in Croatia in the period from January to July was higher than last year. This confirms that purchasing has not stopped, but is adapting, with greater sensitivity to the total costs of ownership.

In response to prices, households remain cautious. They more often choose items on promotion, plan purchases, and postpone non-essential expenses. This caution is most visible in the categories of durable goods and some more expensive fast-moving consumer goods, while everyday consumer products and pharmacy assortments remain more stable.

Overall, 2025 brings a combination of real wage growth and still elevated prices, along with changing monthly retail sales dynamics. The short-term direction will depend on the movement of inflation and the intensity of consumption during the autumn and the final phase of tourist demand. If prices gradually stabilize and real wages continue to grow, above-average turnover months at the end of the year could mitigate weaker results from certain summer weeks.