That is a significantly higher growth than had been forecasted by four analysts for Hina, with an average expectation of a 1% growth on the year. Their forecasts ranged from 1% to 1.2%.
The 3.5% growth is faster than that recorded in December, when it grew 2.6%, and the highest since October 2007, when consumption rose by 3.8%.
Consumer prices in Croatia fell in January by 0.9% on the year which hasn't occurred in the past 15 years, DZS reported.
"The annual growth in real retail over the past six months can probably be attributed to stronger car sales, which recorded a growth of 16.5%," Raiffeisebank Austria analysts have commented on the latest DZS figures.
"However, significant recovery will be limited by the grave conditions and lack of recovery of the labour market, seeing that consumers were mostly just satisfying their basic needs," RBA analysts said.