In a year, the price of food in Croatia rose by 2.7 percent.
According to the Central Bureau of Statistics, consumer prices in Croatia in July fell by almost one percent compared to June. Clothes and footwear were 9 to 12 percent cheaper than in June, fuel about four percent, and fruits and vegetables between one and two percent, reports Večernji List on August 19, 2017.
However, this was just a temporary effect of seasonal summer sales campaigns, which also lowered the annual inflation rate to 0.8 percent. According to the harmonised price index, as applied by Eurostat, the annual inflation rate in July was actually 1.2 percent and was just slightly lower than the average rate of inflation in the euro zone (1.3 percent), or EU-28 (1.5 percent).
Data show that the annual price increase is led mainly by food. In the last year, prices of milk, cheese and eggs grew by more than 6 percent, and meat and oils by between 4 and 5 percent. “In both categories, it is likely a result of an increased demand with a simultaneous drop in the supply, as well as of the influence from foreign markets” commented analysts at Raiffeisen Bank (RBA).
The Croatian Chamber of Commerce reports that pork meat, chocolate, bread, pastry, cakes and animal feed are the most important imported products. During the first four months of this year, meat imports rose by 13 percent compared to the same period last year (102 million euros), import of milk and dairy products jumped by a quarter (64 million euros), while import of cereal products worth 59 million euros remained at the roughly same level.
“What is concerning is the continued growth of meat imports, especially pig meat, as well as milk and dairy products. It is also evident that the import of fruit and vegetables is stagnant,” said Žaklina Jurišić, assistant director of Agriculture Sector at the Croatian Chamber of Commerce.
The price of fish grew by slightly less than 3 percent on a yearly basis, sugar, sweets, vegetables by about two percent, while only the prices of bread and bakery products remaining at the same levels or are even slightly lower. In the first four months of the year, fish were the leading Croatian export food product, followed by sugar, chocolate, corn, soybean and malt extract.
“The return of inflation to positive values is primarily due to higher prices of food, beverages, transportation, and prices in restaurants and hotels. In addition to higher VAT on catering services, the growth in the last category was certainly a result of the rise in demand in the tourism industry. On the other hand, the increase in the prices of transport and food products is certainly a result of movements in world commodity markets. In the second half of the year, we expect that inflation rate measured by the consumer price index will remain in the positive territory, but still below the relatively low 1%,” according to RBA analyst Zrinka Živković Matijević.
Although any price increase represents a problem for people who do not work or have modest incomes, Croatia is still in the group of EU member states with low inflation. The highest inflation rate in the EU is in the Baltic countries (about four percent).
However, there are also positive examples. Croatian citizens pay ten percent lower electricity bills today than last year, and competition has apparently cut the cost of clothing, which is today about 7 percent cheaper than it was in 2015. The only segment where there is an evident price jump of as much as 11 percent compared to 2015 are restaurants, cafes and hotels, which have turned the abolition of a preferential VAT rate into higher prices.
Inflation is still within acceptable limits, and if it comes to the central bank, it would prefer to stabilise it at about two percent. The Croatian government's three-year economic policy guidelines predict that the annual inflation rate will range from 1.1 to a maximum of 1.4 percent, and movements in European and world commodity exchanges suggest there should be no major deviations.
Translated from Večernji List.
