April the 24th, 2022 - Certain Croatian meat prices could soar by as much as 50 percent, with a particular favourite (dried and smoked meat) being the hardest hit.

Inflation is still posing an enormous problem across the Republic of Croatia and indded across the rest of Europe. The ongoing war in Ukraine following Russian invasion back in February is a strong contributor to this unpleasant situation which is continuing to hit pockets hard after an already horrid two years dominated by the global coronavirus pandemic.

As Poslovni Dnevnik writes, and as Jutarnji list reports, over the next six months to a year, the Republic of Croatia is being threatened with a rise in the price of dried meat products by up to 50 percent.

Producers claim that the price of roast meat, prosciutto and other cured meat will increase, due to changes in two production cycles.

There are three factors that have influenced this increase in Croatian meat prices, one is the increase in pork prices by 50 percent, then the subsequent growth of production costs, ie the price of raw materials and energy, and the third factor - higher inflation which is causing issues on a global scale and has been for some time now.

According to the associations involved with the Croatian meat production scene, this is a long-standing problem, where despite the offer of advances, domestic pig production could not be provided for the needs of the market, which would have ensured that the price jump remain under control, Jutarnji list added.

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

April the 22nd, 2022 - Croatian economic analyst Damir Novotny has spoken about the ongoing situation with inflation across the country, the International Monetary Fund's most recent predictions for Croatian GDP growth (or lack of), and when we might expect the very height of this current inflation wave to peak.

As Poslovni Dnevnik writes, we recently wrote about the IMF predicting Croatia's GDP growth to stand at 2.7 percent this year, which is significantly  less than was predicted back in the autumn forecasts.

Croatian economic analyst Damir Novotny explained to HRT that the Croatian economy did grow last year, making up for the loss of 8 and something percent. He noted that economists see these changes in GDP as an aggregate state, but when it comes to how it will affect a certain strata of society, only time will tell.

“Some will lose, some will gain because, when it comes to inflation, there's a redistribution of economic resources and it's a special tax that isn't declared, but it is still a tax. That said, inflation is still relatively low and we can't say that hyperinflation is a current threat to Croatia, although there is always a danger,'' Croatian economic analyst Damir Novotny said.

"Lower growth forecasts and what is even more important - the uncertainty that this time brings means less demand for loans, and loans are still the most important source of income for banks," said Zdenko Adrovic.

Croatia as a Eurozone member

He also noted that Croatian banks will unfortunately worsen their lending conditions because they are threatened by the growth of bad or non-performing loans, so banks need to insure themselves in some way. As for interest rates, the director of the Croatian Association of Banks, Zdenko Adrovic, expects growth, but not in a sudden sense.

Economic analyst Hrvoje Stojic believes that inflation will reach its maximum in the autumn, especially across the Eurozone, and in this country, this wave will be delayed and will be moved towards the second half of the year.

As for the introduction of the euro in Croatia, it is a political decision more than anything else. Croatian economic analyst Damir Novotny believes that in January 2023, Croatia will be a member of the Eurozone. He also thinks that it will be useful because at this time it would represent a new umbrella that can protect the country from major shocks, so people shouldn't be afraid of that.

For more, check out our lifestyle section.

ZAGREB, 21 April 2022 - Two pensioners' associations on Thursday asked the government to raise pensions by 10% and change the pension indexation model, due to the rise of inflation and food prices, for seniors shortchanged in the pension reform.

In an open letter to Prime Minister Andrej Plenković, they say that in February the average pension was 35.5% of the average pay, which puts Croatia at the bottom of the EU. Last year two in three pensions were below the poverty live at just over HRK 2,900.

Since the rise of inflation and food prices poses an additional blow to pensioners' low living standards, the associations expect the prime minister to take action to protect the oldest citizens.

The associations demand that by the end of June, pensions be raised by 10% for all those who retired after 1 January 1999, saying that this would total HRK 308 million a month for 1.14 million pensioners.

The associations don't want the 10% increase to be in force only until prices on the world market are put under control, but a lasting intervention for seniors whose pensions have been cut by 10% by the then pension reform.

They also demand that pensions up to HRK 2,000 be indexed by 120% and those from HRK 2,000 to 4,000 by 110%.

The government has announced that as of next month it will pay an energy allowance for seniors whose pensions are below HRK 4,000.

The associations welcome that, but propose that seniors whose pensions are below HRK 1,500 be entitled to a HRK 400 monthly energy voucher, to which only those receiving national and guaranteed minimum allowances are entitled.

For more, check out our politics section.

20 April 2022 - Like most countries around the world, Croatia has not been spared from increasing inflationary pressures over the past year. Here’s a round-up of inflation in Croatia so far, and what those living here may come to expect in the months to follow.

Inflation trend

It was around April 2021 that inflation numbers in Croatia started making headlines. As the world continued to be in the thick of the pandemic, inflation numbers in Croatia reached a then 2-year high of 2.1%.

This was largely attributed to supply chain issues, and uncertainty surrounding economic recovery after the pandemic, predominantly impacting the prices of energy, food, and construction materials in Croatia

By May 2021, this number grew to 2.4%, alongside other EU countries like Germany, Spain, and Sweden, but still lower than others like Hungary (5.3%) and Poland (4.6%). June 2021 saw a drop in inflation rates to 2.0%, but before everyone could breathe a sigh of relief, it rose to 2.8% in July and 3.1% in August 2021, compared to the same months in 2020.

November and December 2021 saw sharp increases with the DZS reporting inflation rates of 4.8% and 5.5% respectively, the highest level of inflation Croatia had seen since October 2008 when it stood at 5.9%.

Just as it seemed inflation may have leveled off, rates continued to gallop upwards around the time of Russia’s invasion of Ukraine, sending the global economy into a tailspin and energy prices through the roof. By February 2022, prices increased a staggering 7.1% compared to the year prior and March saw rates of 7.3%.

Despite this surge, when compared to other EU countries, inflationary pressures on the Croatian economy are still considered relatively average. Lithuania and Estonia saw price increases of 15.6% and 14.8% respectively, while on the other end of the scale sat Denmark with a 5.3% increase, and Sweden with 4.4%.

Government measures

Still, this prompted Croatian Prime Minister Andrej Plenković to launch a series of measures worth 4.8 billion kuna (€640 million) that recently came into force April 1, 2022.

Part of this 4.8 billion kuna package included reducing VAT (value-added tax) on gas from 25% to 5% from April 1, 2022, to March 31, 2023. This subsidy alone is expected to cost 600 million kuna (€80 million). With approximately 43% of European gas coming from Russia, the most significant price increase was in energy and gas. Here, gas prices skyrocketed by an eye-watering 22.5%.

According to this article, even with the lowering of VAT for gas on April 1, the average Croatian household is expected to allocate up to 990 kuna (€132) more for gas this year compared to last. Bearing in mind that without the VAT reduction from 25-5%, households would have ended up paying 3,762 kuna (€501) more instead.

VAT on food has also been lowered from 13% down to 5% for specific items like fresh meat and fish, eggs, fruits, vegetables, edible oils and fats, baby food, seedlings, fertilizers, and pesticides. The VAT for butter and margarine also shrank from 25% to 5%.

Additionally, VAT on feminine hygiene products fell from 25% to 13%, while VAT on tickets for sports, cultural and other events has been lowered from 13-25% to 5% across the board. The Croatian government also doubled the number of vouchers for the vulnerable, bringing the new total to 400 kuna.

Rapid inflation in gas and energy prices is severely impacting other sectors like agriculture. Image: Pexels.

Consequences for other sectors

As of March 2022, in addition to gas prices, food and non-alcoholic beverages were seeing a 9.4% increase, alcoholic beverages and tobacco up 6.2% with restaurant prices growing by 4.7%.

Recent reports also reveal the price of pork is expected to rise 13% this year compared to the previous year, as increased prices of energy and fuel continue to push up costs of pork processing and animal rearing. With Croatians consuming an average of 50kg per person, the burden of a 13% increase in prices will be felt by consumers and producers alike considering pig rearing and pork processing makes up 25% of total agricultural production domestically.

Even basic items such as bread, coffee, and olive oil are not spared from soaring inflation and may reach levels not seen prior. Bread is expected to hit 15 kuna (€2) per loaf (500g) due to rising wheat prices, especially with Russia and Ukraine exporting a combined 23% of the world’s wheat. 1 kilogram of white flour in 2021 would have set you back 2.50 kuna (€0.33), which has now risen to 4 kuna (€0.53), an increase of almost 60%.

Coffee, a pastime for Croatians, is expected to increase by 1-2 kunas due to rising electricity costs for operators. Compounding this issue are the steeper costs of terrace rentals, where most cafe bars are located. So, if you’re already paying between 9-12 for an espresso, factoring in the increase means that one should expect espresso prices to balloon to 10-14 kunas a pop.

Even the prices of beloved Croatian olive oil will not be spared due to rising fertilizer prices. In 2021, one ton of fertilizer cost approximately 3,000 kuna (€400) but this year, it stands at 8,000 kuna (€1,066). Another staggering increase of 166%! Again, this stems from Russia being one of the world’s key exporters of fertilizers.

Inflation continues to eat away at the savings and purchasing power of locals. Image: Pixabay.

Reduced purchasing power

Overall, inflation has and is expected to continue lowering purchasing power for the average Croatian. According to this article, here is a comparison of what 100 kuna (€13) would buy you in 2020 vs. 2022.

Despite average monthly salaries rising approximately 8% from 6,763 kuna (€897) to 7,300 (€968), the rising rate of inflation continues to chip away at this, driving up the cost of living domestically.

Future predictions

According to this article, the Croatian National Bank (CNB), predicts that Croatian inflation could continue to rise, averaging 5.4% this year which is more than double that of 2021 when it stood a 2.6%.

Whether or not the scenario continues to play out is depending on a myriad of uncertainties and structural factors including the ongoing global recovery from the pandemic, the disastrous war between Russia and Ukraine, and Croatia’s adoption of the euro in January 2023.

However, finance ministers across the Eurozone remain confident that inflation will eventually stabilize close to the target rate with the right monetary policies and tools at their disposal.

(€1 = 7.54 kuna)

April the 20th, 2022 - Might Croatian inflation reach six percent this year? Croatian Government statisticians are continuing to record relentless and very concerning accelerations in terms of price growth: Croatian inflation, as measured by the consumer price index, rose to 7.3 percent year on year in March.

As Poslovni Dnevnik writes, the aforementioned figures in terms of Croatian inflation repesent the highest levels since the summer of 2008, and in just one month, prices rose by an average of 2.1 percent. The energy war between Vladimir Putin and Europe, in addition to the horrendous Russian invasion of neighbouring Ukraine, is increasingly extinguishing hopes that this ongoing jump in prices could be temporary. It isn't surprising that the corrections of inflation forecasts for this year are coming.

Raiffeisen analysts announced last week that their forecast for 5.9 percent in terms of Croatian inflation this year was "exposed to rising risks" and "put under review."

"With the previously present inflationary pressures generated by rising energy and food prices, in the current environment of geopolitical conflicts and extreme uncertainty about their duration and outcome, inflationary pressures are now growing stronger," they said.

The Croatian National Bank (CNB), the central address for all things related to Croatian inflation, predicts that price growth this year could average 5.4 percent, twice as much as last year's 2.6 percent.

In that, they pinpoint the causes of rising prices on three fronts; through the "import" of higher prices of raw materials and industrial products on the global market, among which energy is at the very top of the list, and the recovery of Croatian consumption, which encouraged producers and traders to pass on higher costs to their customers.

Finally, and not entirely negligible, is the factor of statistics, meaning the fact that current prices are being compared to last year's when they were under pressure due to the global coronavirus pandemic, which was an entirely different kettle of fish.

What will happen in the coming months and what will happen to prices across the country as this dire situation unfolds can be predicted only by Mystic Meg. Due to the war in Ukraine, the CNB corrected its estimates of economic growth (which showed acceleration in the first quarter). In the baseline scenario, assuming a relatively short war in Ukraine and a gradual normalisation of energy and raw material prices on the global market, the CNB expects Croatia's GDP growth to slow to 3.2 percent, from 4.1 percent back in December.

A number of factors are involved 

The latest Eurostat figures (which are still preliminary) estimate that inflation across the Eurozone should have reached 7.5 percent in March, after 5.9 percent back in February. That said, it should also be noted that this is only an average because for many countries, that the figure looks good, like Lithuania and Estonia with an estimated 15.6 percent and 14.8 percent, respectively.

EU member states outside of the Eurozone, ie those that still have their own currencies, generally experienced higher inflation back in February than those within the Eurozone and using the single currency: the Czech Republic 10%, Hungary and Bulgaria 8.4%, Poland 8.1%, Romania 7.9% and Croatia 6.3%. The only exceptions are the old member states Denmark and Sweden with 5.3 and 4.4%, respectively.

CNB Governor Boris Vujcic recently said that (along with the recovery, supply-side constraints and rising energy and food prices), Croatian inflation could be further pushed by "a number of structural factors, such as deglobalisation processes, adverse demographic trends and the ongoing green transition.

However, he added that "although there's a strong rise in inflation expectations among both companies and individuals, the financial markets are still maintaining their expectations that inflation in the Eurozone could stabilise close to the inflation target in the coming years, which supports the gradual normalisation of monetary policy."

For more, check out our lifestyle section.

April the 19th, 2022 - Inflation is still causing tremendous issues across the board in the Republic of Croatia, and rising Croatian fuel prices have been one of the most talked about problems over the last few weeks.

This morning, Croatian fuel prices shot up once again after having fallen to more respectable levels a couple of weeks ago. This morning, diesel in particular is 28 lipa more expensive than it was last night. Here are the new prices if you want to fill your tank in this countru as of today.

As Poslovni Dnevnik writes, Croatian fuel prices on sale across the country's many fuel stations has risen once again since midnight.

One litre of Eurosuper 95, which was below 12 kuna last week, now costs 12.19 kuna. In the premium version, the price has risen from 13.16 to 13.67 kuna. A full 50-litre fuel tank is as such 11 kuna more expensive now than it was last night.

A full diesel tank, on the other hand, is 12 and a half kuna more expensive than it was yesterday. A litre of diesel is 28 lipa more expensive this morning than it was at midnight last night and costs 12.70 kuna, while in its premium variants, it costs over 14 kuna.

Depending on the point of sale, a litre of autogas now stands between 6.89 kuna and 7.19 kuna as of this morning.

For more on Croatian fuel prices and inflation as this fluid situation changes, make sure to check out our dedicated news section.

April the 18th, 2022 - A massive 32,000 tonnes of diesel is going to be poured into the market from Croatian mandatory stocks of that fuel following a government decision issued last week. The move was made as more and more countries explore gas and fuel options that minimise any reliance on Russia.

As Poslovni Dnevnik writes, on Thursday, the government decided to release 32,000 tonnes of diesel fuel from Croatian mandatory stocks of oil and petroleum products. The Hydrocarbons Agency will release 12,000 tonnes of said diesel fuel from Croatian mandatory stocks by the end of April and 20,000 tonnes by the end of May 2022.

The Minister of the Economy and Sustainable Development, Tomislav Coric, explained that a meeting of the International Energy Agency (IEA) was held on April the 1st, 2022, at which an agreement was reached to release 120 million tonnes of oil from mandatory reserves in order to send a unique and strong message to international oil markets that there will be no shortage of supplies as a result of the Russian invasion of neighbouring Ukraine.

Although the Republic of Croatia is not a member of the International Energy Agency and has no obligations to engage in these practices, it can participate in the second joint coordinated action with the aforementioned 32,000 tonnes of diesel fuel, or 238,000 barrels converted into crude oil equivalents.

Back in March of this year, the Republic of Croatia participated in the first joint coordinated action to launch Croatian mandatory stocks out onto the market, during which it released 22,000 tonnes of diesel fuel, ie 164,000 barrels converted into crude oil equivalents, Minister Coric explained.

The decision to place Croatian mandatory stocks of oil and other such petroleum products on the market was made by the government, and the Hydrocarbons Agency will release those mandatory stocks onto the market at regular market prices.

For more news like this, make sure to check out our dedicated lifestyle section.

April the 4th, 2022 - Croatian fuel prices should be finally set to drop tomorrow after last week's hike which came as a very unwelcome surprise to drivers.

As Poslovni Dnevnik writes, following on from last week's significant and entirely unwelcome increase in Croatian fuel prices, there's finally a little bit of good news for the nation's drivers. From tomorrow on, Croatian fuel prices will be lower, but they will still not be able to compensate for the increase from last week.

As such, the prices of regulated Eurodiesel in Croatia should be about 80 cents lower, while Eurosuper 95 petrol should be about 35 cents cheaper. This means that one litre of Eurodiesel should cost around 12.70 kuna, while a litre of Eurosuper should cost around 12.10 kuna. There was a significant rise in Croatian fuel prices last week. Petrol rose in price by 61 lipa, and diesel did the same by as much as 1.48 kuna, 24sata writes.

Anonymous activists announced that last night, some fuel stations here in the City of Zagreb had stickers with the image of Prime Minister Andrej Plenkovic stuck on them, as well as a derogatory message.

"We're aware that the growth of Croatian fuel prices is being influenced by many factors, but also Andrej Plenkovic's government has not done everything it could have to curb the rage in prices. They reduced VAT on some energy sources, but they didn't do the same with fuel, just as they didn't reduce excise duties as much as they could have, but only by a miserable 20-40 lipa. We demand a stronger reaction from the government, a reduction in levies and greater relief. We'll continue this action over the coming days when we intend to present ourselves to the public,'' the group of activists called the Boys and Girls of Zagreb's Asphalt ", 24sata writes.

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

ZAGREB, 1 April (2022) - Bridge MP Zvonimir Troskot said on Friday the government had not used all the available instruments to cushion the impact of rising prices on citizens' living standards and on businesses or secure energy supply routes, calling for lower VAT and fuel excise taxes and for subsidies for enterprises.

Troskot recalled that Bridge MPs and 16 other MPs had submitted a motion to offer additional short and long-term solutions as, he claimed, the government had not used all the instruments at its disposal.

Asked about a government reshuffle, Bridge MP Nikola Grmoja said he did not want to comment on new candidates for ministerial posts "because it is clear that due to numerous scandals a whole set of government officials are under investigation by independent institutions and the only solution is a new election."

This is not a government reshuffle but an attempt to decriminalise the government, however, such an attempt can never succeed with the HDZ's partners because the ones to be appointed will probably also be compromised, said Grmoja.

Social Democrats expect additional measures for business sector

The Social Democrats group in the parliament today said they expected the government to introduce additional measures to consolidate the economy and help households, noting that a new election would be the best solution.

MP Ivana Posavec Krivec called on PM Andrej Plenković to consider appointing in the coming government reshuffle a minister of transition, noting that Croatia urgently needed transition to renewable energy sources and lower VAT for households and enterprises.

MP Domagoj Hajduković believes Agriculture Minister Marija Vučković should be replaced over inactivity in light of the rising prices.

We still do not know the state of commodity stockpiles and what kind of goods they contain, he said, adding the government had replenished the stockpiles only after the war in Ukraine broke out and prices started to soar.

Prices continue to rise despite cuts of VAT on certain products, he said, noting that unfavourable weather conditions, the rise in prices of mineral fertilisers and large areas of uncultivated land bode a very bad year, he said, fearing Croatia would not be self-sufficient.

MP Matko Kuzmanić warned about the high price of blue-dyed diesel used in fishing and called for subsidies for fishermen.

For more, check out our politics section.

April the 1st, 2022 - Could Croatia soon be bidding farewell to 10 kuna coffee, at least in the City of Split? It seems so, as Croatian terrace rental costs are set to soar with just about everything else as the inflation wave continues to engulf us.

Sitting and drinking a 10 kuna coffee in the sun on the famous Split Riva for hours on end while gossiping about politicians but never voting them out is an Olympic passtime for most Croats. One small cup of coffee can last a good two hours when people get together to put the world to rights, but the price of 10 kuna for that cultural experience may soon be no more.

As Poslovni Dnevnik writes, one of the latest decisions made by the Split local authorities is the increase in the price of Croatian terraces. This will take effect today (April the 1st, 2022) plunging the already suffering catering and hospitality sector and the people of Split are into more issues.

Coffee will no longer cost 10 kuna. Whether the price will be bumped up to 12, 15 or 20 kuna hasn't yet been firmly decided, but those in this business are very worried about whether people will be able to afford it, or simply change their habits out of principle.

Come rain or shine, be it a normal working day or a weekend, for many people, sitting on a nice Croatian terrace and mulling over a cheap coffee is an indispensable ritual. The favourite location for locals and foreigners alike in Croatia's second largest city is always the Split Riva (waterfront).

"It's better than going to psychotherapy. We don't really have that. So for us Dalmatians, this is all we have. We'll have to reduce our ''psychotherapy'' to once a day and we will somehow manage,'' stated Zora Gala.

"Everything can be left, I can even leave having a if I'm forced to do that. I can do that, but life is fleeting so why not indulge in some habits that are harmless?'' said Matija Mrdjen.

An espresso on the Split Riva already costs between 9 and 12 kuna, according to RTL.

"People look at the bill, they didn't ask how much it was upon making the order, but as soon as the coffee comes to the table, people immediately look at the bill and see what the price is," said waiter Augustin Silic. In addition to other costs, Croatian terrace rental in the very heart of Split has been growing since April last year, in some cases by almost 100 percent.

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