December the 17th, 2022 - Record Croatian inflation is sending the prices of food and drink skyrocketing as the pressures being placed on our pockets and bank accounts show little to no signs of letting up yet.

As Poslovni Dnevnik writes, at the annual level (comparing the months of November 2021 and November 2022), the prices of goods and services for personal consumption, as measured by the consumer price index, were on average a concerning 13.5% higher, the State Bureau of Statistics recently announced.

The latest statistical data shows that the growth of consumer prices has well and truly accelerated on an annual basis. According to the record data published to date, the highest rate of annual Croatian inflation so far was recorded in October, when it amounted to a worrying 13.2 percent.

The biggest increase was observed in the food and non-alcoholic beverages group

Observed according to the main groups of the ECOICOP classification, on an annual basis, the largest increase in consumer prices on average was achieved in the groups Food and non-alcoholic beverages, by 19.2%, Restaurants and hotels, by 17.0%, Furniture, home equipment and regular household maintenance by 16.6%, Housing, water, electricity, gas and other fuels, by 16.5%, Transportation, by 13.3%, Various goods and services, by 11.6%, Recreation and culture, by 9.1%, Clothing and footwear, by 5.8%, Alcoholic beverages and tobacco, by 4.6%, Healthcare, by 4.1%, and Education, by 2.3%.

The largest contribution to the growth rate of the annual index was achieved in the groups Food and non-alcoholic beverages (+4.98 percentage points), Housing, water, electricity, gas and other fuels (+2.78 percentage points), Transportation (+1.96 percentage points points), Furniture, home equipment and regular household maintenance (+0.95 percentage points), Restaurants and hotels (+0.85 percentage points), Miscellaneous goods and services (+0.72 percentage points), Recreation and culture ( +0.48 percentage points), Clothing and footwear (+0.34 percentage points), Alcoholic beverages and tobacco (+0.23 percentage points) and Healthcare (+0.13 percentage points).

Observed according to special groups, the highest increase in prices on average at the annual level was achieved in the Energy group, by 21.2% (contribution to the increase of +3.56 percentage points).

As Croatian inflation continues to make more and more people struggle to make ends meet each month and drag those who were on the breadline deeper into poverty, many are asking whether or not the government is doing anywhere near enough to really curb the events of this unprecedented living crisis.

For more, check out our dedicated news section.

June the 13th, 2021 - Croatian producer prices have risen by as much as 7.6 percent, quite a significant bit more than the ECB's initial predictions would have suggested.

As Marina Klepo/Novac writes, back in May, Croatian producer prices rose by as much as 7.6 percent when compared to the same month last year, according to the CBS. This is the third month in a row that a significant increase in the price of products supplied by Croatian producers has been recorded; in April, annual prices increased by 5.8 percent, and in March they rose by 3.5 percent.

However, when energy is excluded in that, the prices of industrial products rose by 1.3 percent back in May, which is also mainly related to the growth of raw material prices. This fits in with the dominant interpretations that current inflationary pressures are most affected by rising energy prices and will not have a lasting effect. Manufacturers of furniture (5.3 percent), metals (5.2 percent), tobacco products (4.9 percent) and paper and wood products (4.3 percent) stand out from the activities that significantly increased the cost of production.

The redemption of bonds

How much Croatian producer prices spilled over to those in retail will be known only on June the 16th, when the CBS publishes the data on that. The acceleration of inflation in April to 2.1 percent from 1.2 percent a month earlier, the CNB explains, "was largely the result of an increase in the annual growth rate of energy prices, due to the positive base effect of the period."

Here in Croatia, as it has been in most of the world, a higher inflation rate is expected than previously thought. The first Eurostat data show that consumer prices in the Eurozone rose by 2 percent in May, with the highest occurring in Luxembourg, where they increased by 4 percent, and then in Germany, for example, where they increased by 2.4 percent.

At a recently held meeting, the ECB released its brand new economic forecasts, including an upward revision of inflation, but President Christine Lagarde stressed the temporary nature of these inflationary pressures, as well as the continuation of a "significantly faster" bond buyout plan in order to boost the Eurozone's recovery.

Transient growth... or not?

Leaving Croatia and the Eurozone aside for a minute, investors are primarily worried about inflation in the United States, given a recent announcement that it jumped to 5 percent in May, the most since back in crisis-dominated 2008. That’s even more than expected (analysts in a Reuters poll estimated it at 4.7 percent) and well above the Federal Reserve’s target levels of about 2 percent. Those who believe that, like the ECB, the US Federal Reserve will not tighten its monetary policy, point to the "pandemic" impact on price growth as an argument.

Products such as furniture, used cars, car rentals, hotel accommodation and plane tickets became more expensive. But core inflation, excluding energy and food, rose 3.8 percent in May, the most since way back 1992, and some analysts see that as a cause for legitimate concern.

For more on Croatian producer prices, make sure to follow our business section.