March the 7th, 2022 - With Croatian inflation measures set to come into force on the first of next month, just how much will Croatian electricity prices rise after that date?

As Poslovni Dnevnik writes, Hrvatska elektroprivreda (HEP) has announced its new Croatian electricity prices, which will be in force from April the 1st, and it seems that electricity will still be more expensive for some consumers than what Prime Minister Plenkovic announced it would be back in mid-February.

Back in mid-February, the Croatian Government adopted a package of measures to try to put a cap on soaring energy prices, according to which VAT on electricity will remain at 13 percent, and Prime Minister Plenkovic announced that electricity prices for households should increase by up to 9.6 percent. Without the introduction of these government measures, the growth of prices for households across the country would stand at 23 percent, all because the price of electricity on stock exchanges has quadrupled in just one year, writes Energetika-net.

However, the published price lists from HEP suggest that the price increase for most people who have dual-tariff metres in their homes will be higher than expected, at least according to their current calculations.

"The 9.6 percent increase in Croatian electricity prices was probably used in the presentation as a represenation of a mix of different types of consumers, but it doesn't apply to all consumers in the ''household'' category. When the tariff items published by HEP Elektra (universal service) and HERA are applied, households will receive bills which are 8 percent higher from this supplier as of the 1st of April for one tariff metres, while two-tariff metres (TM white) will receive bills which are higher by 11 percent.

When it comes to the question of whether or not Croatian electricity prices for end users will actually increase even more, it all depends on HEP's decision, ie whether they will start collecting a solidarity fee, which they haven't been collecting so far. In that case, the bills for one tariff metres (blue) would grow by 11 percent, and for two-tariff metres (white), by 14 percent. As for HEP Supply (HEPI), the average growth will be 14 percent, and if the solidarity fee does indeed start being collected, then growth will rise to 17 percent. These calculations include VAT,'' explained Nenad Kurtovic from the Split Consumer Association.

When asked by Novi list about their new tariffs, HEP replied that the amount of change in the cost of electricity will all depend on the tariff model and of course on the overall consumption of each individual customer.

"As announced in the presentation of the package of inflation measures to mitigate the growth of energy prices by the Croatian Government, the average electricity bill will increase by 9.6 percent. The amount of the change in cost in each individual case will depend on the tariff model and the amount of electricity consumed, as well as on the ratio of consumption in the higher and lower tariffs,'' HEP replied.

For more, make sure to check out our lifestyle section.

February the 27th, 2022 - There has been a concerning three percent increase for Croatian food prices, which also regards certain drinks, in the space of just one single month. What's going to unfold as this situation continues is worrying for many.

As Novac/Jutarnji/Marina Klepo writes, back in January 2022, inflation accelerated further, to 5.7 percent when compared to the same month last year, while it was 0.3 percent on a monthly basis, according to the CBS. As such, the December (2021) record of 5.5 percent was exceeded and inflation reached its highest levels in Croatia since way back in October 2008. As was the case in previous months, the rise in prices is led by energy and food.

Pressure on Croatian food prices began back in the middle of last year due to developments on global markets, and partly due to unfavourable conditions here on the domestic market. In January, food and non-alcoholic beverages were as much as 9.4 percent more expensive than they were a year ago, and in just one month, prices jumped by 2.9 percent.

As food makes up a quarter of the average Croatian consumer basket, its impact on the overall level of inflation is also significant - amounting to 2.44 percent. Accelerated growth of energy prices continued, meaning that transport, which is primarily related to fuel, recorded double-digit annual growth of 10.8 percent, with a contribution to inflation growth of 1.59 percent.

In third place is the category of furniture and home furnishings with an annual growth of five percent and a monthly growth of 1.3 percent. Prices in Croatian restaurants and hotels, on the other hand, were 4.7 percent higher back in January and 0.4 percent higher than they were in the previous month of December.

According to the harmonised consumer price index used by Eurostat, inflation here in the Republic of Croatia back in January stood at 5.5 percent. At the same time, the average for the Eurozone was 5.1 percent, and for the European Union (EU) stood at 5.6 percent. The highest inflation rates are still being recorded in the Baltic countries: Lithuania with 12.3 and Estonia with 11 percent. The lowest price growth, on the other hand, has been seen France, 3.3 percent, and in Portugal, 3.4 percent.

In order to mitigate the impact of inflation on the cost of living, the government again administratively capped the country's fuel prices in early February, and then adopted a comprehensive package of measures worth 4.8 billion kuna, which will apply from the 1st of April. All hopes were that this rapid inflation would be temporary, that prices would slow down in the second half of the year, but Russia's invasion of Ukraine throws a spanner in the works of all previous forecasts.

"Although price growth is limited by government decisions and administrative restrictions on fuel prices, given recent events in Ukraine and the escalation of the conflict, our projections for this year are exposed primarily to rising risks," said RBA analysts, who expect an average consumer price growth rate in 2022 of 3.1 percent.

However, the Croatian National Bank (CNB/HNB) has previously warned that inflation could reach 4.5 to five percent this year. As things stand, that assessment could also undergo corrections. Initial estimates by global think tanks suggest that the key effects of the war in Eastern Europe will be higher inflation and slower economic growth.

If oil prices rise to $130 a barrel in the next few weeks and European gas prices to 180 euros per cubic metre, the contribution of energy to average headline inflation could increase, instead of falling gradually as was generally previously assumed. In addition to energy, rising Croatian food prices also seem inevitable, albeit with less of an impact on overall inflation, given that Russia and Ukraine export 25 to 30 percent of the world's wheat, and Ukraine is also a major exporter of corn.

As such, in the coming months, during the second quarter, it is estimated that in developed economies, the inflation rate could be at least a fifth higher than previously calculated and exceed six percent. However, according to Global Economics analysts, inflation should fall once again later in the year, partly due to base effects, but average inflation levels in developed economies, they estimate, could stay at around four percent by the end of the year.

For more on inflation and increasing Croatian food prices, check out our lifestyle section.

ZAGREB, 24 Feb 2022 - Prices in Croatia increased by 43.4% from 2001 to 2021 while utility bills were 85% more expensive and inflation affected pensioners and single households the most.

In January, inflation accelerated by 5.6% in the European Union and by 5.1% in the euro area. In Croatia, inflation also picked up at the start of this year to 5.5% from December's 5.2%.

The highest inflation rates in the EU were registered in the Baltic countries while the majority of countries in central and eastern Europe had inflation rates of above 6% and close to 9%. The prices of gas and energy will probably not settle down for some time yet and the majority of citizens will be faced with lower living standards.

Inflation is worst for pensioners, single parents, and low-income households, according to a survey by the Zagreb Institute of Economics (EIZ) conducted this week.

The EIZ says that in the period between 2001 and 2021 prices in Croatia increased by only 43.4%. Food prices increased by 47%, alcohol was 134% more expensive and expenditure on healthcare doubled in price. Utility bills jumped by 85% in that period while telecommunication costs fell by 5% and footwear and clothing expenses by 10%.

The survey showed that inflation did not affect all groups equally. In the past two decades, the pensioner inflation rate was 9.3 percentage points higher than the reference rate, inflation was 10.44 pp higher for single households, while inflation for 10 percent of the richest people was slightly less than 2 pp lower than the average.

"Figuratively speaking, a pensioner household with monthly expenses of HRK 4,000 in 2001 paid HRK 6,107 for the same shopping basket 20 years later while the reference inflation rate suggests that their shopping basket should have cost HRK 5,735," the EIZ said.

For more, check out our politics section.

February the 23rd, 2022 - The Croatian Chamber of Commerce (HGK) is seeking aid for large Croatian companies as well as for micro, small and medium enterprises as the energy crisis continues.

As Poslovni Dnevnik/Marija Brnic writes, the state of emergency for the Croatian Government will likely leave even less room for negotiations on the possible "inclusion" of large Croatian companies in the package of assistance measures which entrepreneurs are seeking through the Croatian Chamber of Commerce (HGK) even after its presentation last week.

There is a little more than a month left until the start of the implementation of the recently revealed government inflation measures worth almost five billion kuna in total, during which the criteria and methods of obtaining aid should be determined, intended - when it comes to entrepreneurs - primarily for micro, small and medium enterprises. Large Croatian companies appear to have been somewhat left out in the cold.

The Croatian Chamber of Commerce believes that the aforementioned package of inflation measures should be expanded and should include large Croatian companies that have a high share when it comes to their number of employees, as well as their exports and revenues. Otherwise, they say, those companies with a large number of employees and industrial plants with high energy consumption will hardly be able to overcome the impact of the price increases that have and will continue to hit them.

The measures as they stand today envisage subsidies for smaller companies in the amount of 15 lipa per kWh for those with a consumption of up to 10 GWh, and it is planned that 600 million kuna will be made available for vouchers from this measure by the end of March next year.

The Croatian Chamber of Commerce has called on its members to take measures to reduce energy costs for all end users and help companies and industries overcome problems caused by rising prices, and many of them have introduced measures for all consumer groups, thus including large and energy-intensive companies.

Examples of quality measures include Belgium, which has banned unilateral changes to contracts whereby energy distributors and suppliers can increase prices on their own in fixed-price contracts, and in nearby Italy, which abolished network charges in the first quarter of 2022. Italy also reached for a 20 percent tax cut on its large consumers for energy purchased and consumed in the first quarter.

"Following these measures, the members of the Croatian Chamber of Commerce proposed the abolition or reduction of tariff items where possible, or to at least keep them at the same level until the market stabilises," said the Croatian Chamber of Commerce, noting that it is crucial for industrial consumers to have stability in their contracts within the gas year, ie contracted fixed prices.

One of the solutions that can help this category is to reduce the amount of income tax liability by up to 50 percent of the value of investments in renewable sources, retroactively According to their proposal, the compensation for the reduction of the tax liability could be used for a period of four financial years.

For more, check out our business section.

February the 19th, 2022 - With rising energy costs, with a particular emphasis being placed on fuel and gas continuing to pose issues to both business owners and average citizens alike, just how will government inflation measures really affect the average Croatian household budget?

As Poslovni Dnevnik writes, after the government presented its inflation measures to attempt to mitigate the impact on people's standards, the country's residents, especially those who use natural gas for their heating, have begun to calculate precisely how much each of these measures will have an impact on the average Croatian household budget.

It should be noted that the government has decided to lower the VAT on gas from 25 down to just five percent, and that will be the case from April the 1st this year to March the 31st next year. After that period, gas and heat will remain permanently at the VAT rate of 13 percent, meaning that they will both be equated with the costs of electricity. In addition, the government will subsidise the price of gas to all households, with direct support of 10 lipa per kilowatt-hour, or about 20 percent of the projected price of 66 euros per megawatt-hour. The measure related to this subsidy will cost 600 million kuna.

Guided by this data, Glas Slavonije/The Voice of Slavonia writes that when it comes to gas, it would have been as much as 76 percent more expensive as of April the 1st, but with these recently revealed government measures, this increase will amount to a maximum of 20 percent, depending on stock market prices.

The average family in Croatia now pays 4,950 kuna a year for gas. Without any government intervention, this annual cost would increase by a worrying 3,762 kuna, meaning that the average Croatian household budget would need to allocate a much higher 8,712 kuna or 726 kuna per month for gas. Only by lowering the VAT rate from 25 percent down to five percent would bills grow by 48 percent, or by 2,376 kuna, and with a direct subsidy to households, the increase would be up to 20 percent. This means that as of April the 1st, the average Croatian household budget will have to allocate up to 990 kuna more for gas, or 82.50 kuna more per month.

For more, check out our dedicated lifestyle section.

February the 19th, 2022 - The set of Croatian inflation measures which were revealed just this week and which aren't due to come into force until April the 1st this year have many companies with increasing bills biting their nails. For many, it isn't being dealt with quickly enough.

As Poslovni Dnevnik/Marija Brnic writes, while it's excellent that the government has recognised the spirit of the economy and the level of damage that can be caused by rising energy prices, this is only a rough framework and much will depend on how the implementation of Croatian inflation measures is defined and organised.

As such, the Croatian Government's package of measures to alleviate inflationary pressures was commented by Ivan Miloloza, the owner of Munja, one of the companies that has been seriously affected by the multiple increase in gas prices.

As presented by Prime Minister Andrej Plenkovic, the Croatian inflation measures are a package which is quite comprehensive, it has a wide range when it comes to how much of society it will cover, as it does for products for which VAT will be reduced. On top of that, there's a lot of assistance provided for enterprise owners and businessmen, who, just like ''normal'' people, will receive vouchers for covering part of the cost of gas, while farmers will receive support for the purchase of mineral fertilisers.

The total value of the package of Croatian inflation measures stands at a massive 4.8 billion kuna, and the largest part refers to households. Measures for the economy, according to the government, had to be of small value, and couldn't be targeted, for example, at gas suppliers, because what's been built into this package is possible only according to European Commission (EC) rules. These Croatian inflation measures will take effect on April the 1st.

The application coincides with the end of the winter season, so the government expects that the effect will be to maximise the impact on household budgets and preserve purchasing power, and thus contribute to the continuation of the trend of recovery and competitiveness of the domestic economy.

For those deeply affected by the drastic rise in gas prices, the word on everyone's lips now is just how the use of fuel/gas vouchers will look in practice. The realisation was announced through Hamag-Bicro, where they have no more information, but at the presentation it was said that the application of measures will not be retroactive. This is exactly what received the most negative assessments from business owners, especially from those who own smaller companies, whose gas costs exploded on November the 15th last year, increasing anywhere between three and seven times.

"This ordeal isn't going to end just because of this announcement, we won't be breathing a huge sigh of relief come April the 1st,'' they said from one of the enterprises from this affected group of company owners.

Micro, small and medium enterprises, with an annual consumption of up to 10 Gwh, will be able to count on coverage of up to 15 lipa per Kwh, and the subsidised amount will be deducted from their vouchers every month until March the 30th, 2023.

According to the government's estimate, about 600 million kuna will be needed for these Croatian inflation measures, and it should cover 99 percent of companies in that group. The largest consumer of gas in the economy, Petrokemija, will not be able to use this measure, but will partially feel the relief of the burden due to price shocks by the covering of the costs of farmers, who will receive subsidies for the purchase of mineral fertilisers.

They can count on subsidies of up to 20 hectares of agricultural land, for the first 10 hectares the price will be 450 kuna per hectare, and for the remaining ones - 250 kuna. These Croatian inflation measures are expected to cover about 88,000 farms across the country, and 200 million kuna is planned for the measure.

And for fishermen, about 2000 of them, 50 million kuna of support for the costs of blue diesel has been provided. The Croatian Chamber of Agriculture will discuss the measures in more detail as we move forward, but President Mladen Jakopovic expects that some producers will still be left somewhat dissatisfied. He also hopes that the Ministry of Agriculture will show some additional sensitivity to production, especially when it comes to livestock.

Farmers and producers are positive about the reduction of VAT on a number of products, and this regime includes gas and heat, for which the rate will be permanently reduced to 13 percent, the same amount as for electricity, while from April the 1st 2022 to March the 31st 2023, VAT on gas will be reduced by 5 percent.

The catering sector is hurt by the fact that coffee, tea and juices are not included in the list of food items which will have VAT reduced, which they have been asking the government to do for a long time now.

Reactions were immediately fueled by skepticism and the expectation that lower VAT would not be felt on final product prices. HOK pointed out that, since the package of Croatian inflation measures comes into force in a month and a half only, the question remains as to what extent a reduction in the prices of products and services can even be expected, given that a large number of business owners are already suffering damage.

The Prime Minister could only state that the government has taken the first step, and has called on everyone in the chain to show solidarity and not use the opportunity for profit, and he said that the engagement of consumer protection associations will now be important. HUP CEO Damir Zoric also called on customers to shun those who don't show solidarity in fighting rising inflation.

For more, make sure to check out our dedicated business section.

February the 17th, 2022 - PM Plenkovic has revealed the Croatian Government's highly anticipated inflation measures to try to curb the negative effects globally rising prices are having on the domestic economy and as such on the country's residents.

As Poslovni Dnevnik writes, PM Plenkovic has stated that Croatia's inflation measures will be put into force as of April the 1st this year.

"The current global rise in energy prices has caused a wave of rising prices across Europe. Fuel prices in Europe are rising due to higher demand after the coronavirus crisis, the second reason is the situation with Russia, which is the largest supplier and has reduced production, Norway can't increase its production, in Europe there is higher demand due to recovery and colder winters. 43% of European gas comes from Russia, 23% comes from Norway, 11% from Algeria. Europe imports 61% of its total energy needs and 90% of its gas needs, which accounts for 21% of energy consumption,'' said PM Plenkovic, adding that the package of measures will be in force from the aforementioned date.

“The average price is 120 mW / h, 2.7 times higher than in Croatia. In Croatia, we had a system in which the prices were regulated for a year. If it weren't for this intervention, the prices for electricity would increase by 23 percent from April the 1st, and for gas, by 79 percent ", he emphasised.

"The package we're presenting today is worth 4.8 billion kuna. It was done systematically, in coordination with all ministries and bodies. It applies to households, companies and farmers. It's universal, meaning it's aimed at all users. It refers to the reduction of household bills, tax relief, one-off benefits for pensioners, a special programme for fishermen Gas prices will grow to a maximum of 29 percent with these measures in place. As far as gas is concerned, if we did nothing, 0.326 kW / h would jump to 0.574 kuna. When we reduce VAT, we arrive to 0.482, and with an additional subsidy we come to 0.382 kuna per kW / h,'' said PM Plenkovic.

''These benefits will apply to all households that use gas. The amount of support directly on the bill is 10 lipa per kilowatt-hour. The amount of the discount is shown on the invoice with a separate item. The cost of this measure is 600 million kuna, and we'll provide it by selling greenhouse gas emissions at auction. By changing the law, we'll permanently reduce the VAT on gas and heating from 25 percent to 13 percent. This equalises the VAT on electricity and gas and thermal energy,'' he added.

Gas will be reduced from 25 percent to 5 percent from April the 1st, 2022 to March the 31st, 2023.

VAT on food is also being reduced from 13 percent down to 5 percent on fresh meat and fish, eggs, fruits, vegetables, edible oils and fats, baby food, agricultural costs, seedlings, fertilisers and pesticides, and from 25 percent to 5 percent. percent on butter and margarine. VAT on products such as sanitary pads and tampons is also being reduced from 25 percent down to 13 percent. VAT on tickets for sports, cultural and other events is also being reduced from 25 and 13 to 5 percent.

The amount of vouchers for the most vulnerable in society is also being doubled, increasing from 200 to 400 kuna.

For more, check out our politics section.

ZAGREB, 16 Feb 2022 - Union leaders Mladen Novosel and Krešimir Sever on Wednesday said that the government's measures to cushion energy price hikes are comprehensive and will lead to a milder blow to the wallets of citizens, pensioners, socially vulnerable citizens, as well as entrepreneurs and the economy overall.

President of the Union of Autonomous Trade Unions of Croatia (SSSH) Mladen Novosel said that the unions had met with Prime Minister Andrej Plenković just prior to the measures being presented along with representatives of pensioners and the Employers' Association.

Too much left up to "good faith" of those who raised their prices

"The measures are comprehensive, just like the unions had called for. They foresee support for socially vulnerable citizens and enterprises. On the most part, the financial measures are directed at reducing VAT, tax reliefs on electricity, gas and some food products," Novosel told Hina.

He warned that there was a "catch" in the entire story because too much has been left to the "good faith" of those who raised prices, that they might reduce some prices and not increase them any further.

Novosel believes that the government will partially reduce costs for citizens after 1 April, however, those costs that have accumulated due to price rises so far will not be reduced.

"Costs can be reduced only in the next period, perhaps through a lower annual price of electricity for citizens, a somewhat lower price for gas and cushioning additional price increases," he said.

Novosel assessed that a lower VAT on gas and heating to 5% over the next year and then a permanent reduction to 13% is a good move.

"In that period we would expect distributors to reduce the price of gas. The expectation is that gas prices on the global market will stabilise," Novosel added.

President of the Independent Trade Unions of Croatia Krešimir Sever believes that the measures will certainly lead to savings for citizens, pensioners, and entrepreneurs.

"That should all result in a much milder blow than we were afraid of and which occurred in most European countries at the end of last year," Sever said.

He added that reduced VAT on some additional food products is good because it should result in less pressure on household budgets, but there is no guarantee that will in fact occur. "We've seen this before where VAT was reduced but prices did not subsequently fall", said Sever.

For more, check out our politics section.

ZAGREB, 16 Feb 2022 - Opposition MPs on Wednesday welcomed the government's measures to alleviate the impact of rising inflation on citizens, VAT reduction and its aid scheme, but noted that measures for the business sector were insufficient and belated and warned that margins could grow and prices stay the same.

SDP MP and former finance minister Boris Lalovac welcomed the scheme, noting that it was comprehensive and generous.

"These measures will definitely alleviate the impact of inflation, the market will stabilise and there are instruments to alleviate emergency situations," he said, adding that it would be good if the government introduced price monitoring to establish if VAT reduction had actually helped reduce prices of products for citizens.

Stephen Nikola Bartulica of the Homeland Movement said that the government should have reacted sooner, that its measures were welcome but few and belated.

Marijan Pavliček of the Croatian Sovereignists said that the government's measures were partially good but belated and that more attention should be given to farmers given that prices of their production materials "have gone up by 400%".

Romana Nikolić of the Social Democrats, too, believes the government's measures are belated and partially misdirected.

She recalled that her party group had proposed reducing the VAT rate on electricity and gas and raising the non-taxable income from HRK 3,800 to 5,000, which would result in a HRK 300 increase in all wages. Reducing VAT on food can result in an increase in trade margins while prices will remain the same, she warned.

Anka Mrak Taritaš (GLAS) said the government's measures for households were good and fair, but that those for the business sector were not sufficient and were belated.

"The government should accept the Opposition's proposals and reduce the price of labour to help the business sector," she said.

Zvonimir Troskot of the Bridge party believes the measures are belated but he welcomes the reduction of VAT and the redirecting of social transfers from the Energy Efficiency Fund.

He pointed to a lack of a long-term energy policy.

Sandra Benčić of We Can! said that the measures exceeded the expectations.

"I believe the social package is good, that it covers a broad group of people, which is good. It is good that all households will receive payments for heating, gas and electricity costs," she said, adding that subsidies for the business sector should have been higher.

She also welcomed the reduction of VAT but warned that without control mechanisms for extra profit from margins, citizens would possibly not feel the lowering of prices.

For more, check out our politics section.

February the 16th, 2022 - Croatian National Bank economist Vedran Sosic has spoken out about interest rates and when prices in general might return to some form of normality.

As Poslovni Dnevnik writes, economist Vedran Sosic has stated that currently, inflation is expected to peak in the second quarter, after the peak of electricity and gas prices, and should calm down entirely by the end of the year. Raw material and energy prices have boosted inflation and it's normal that we're currently troubled by the price of oil, it is difficult to predict what will happen there. A slight descent is expected towards the end of the year, but all this is all still shrouded in uncertainty.

''Energy prices have quickly made their mark on prices being paid for fuel at the pumps, although we still have a limit on petrol prices, we'll see what happens with fuel costs in April - we have a package that should alleviate this spillover. Food is currently the largest contributor to inflation, with prices rising by around 8 percent, sometimes by even more. Producer food prices rose by about 4 percent, less than the case with retail. Traders say they're trying to take on part of the cost growth on margins, but according to statistics, it seems that margins haven't yet been reduced. A lot of what happened last year has already been absorbed in terms of prices, so that's something we shouldn't be seeing in the coming months,'' explained economist Vedran Sosic.

He also spoke to N1 and said that it is possible to use the growth of raw material prices to increase the price of the final product: "It's possible for that to happen. That is the greatest danger. Inflation is also a psychological phenomenon, the more we talk about it, the greater the risk that the inflationary spiral will roll, which is harder to bring back down again.''

"Interest rates will rise, but people can protect themselves now"

Commenting on interest rates on loans, CNB's main economist Vedran Sosic explained:

“Back in October last year, when it became apparent that inflation was going on, we warned people that interest rates would rise. The normalisation of monetary policy was expected, those expectations haven't really altered and so these jumps shouldn't be sudden. For the European Central Bank, the market expectation is about half a percentage point increase in interest rates. In some markets, this growth can be seen, Croatia borrowed more when it issued bonds, so the growth of interest rates is already visible.

Every loan is different - those that come with a fixed rate are protected. Those who have a variable, again, aren't the same as what's tied in with the interest rate. An increase of one to two percentage points for those who have a loan for a period of 20 years, could mean a 10 to 20 percent higher installment, that would of course be the worst case scenario - so about 400 kuna on a loan of 4,000 kuna. The suggestion to people is to look at what rates they have, maybe reprogramme things, change the bank… Let them ask personal bankers, inquire about protection, there's still time to change those loans.'' concluded economist Vedran Sosic.

For more, check out our dedicated lifestyle section.