ZAGREB, 20 July 2022 - For May 2022, the average monthly net earnings per person in paid employment amounted to HRK 7,690 kuna, nominally 8.2% higher and really 2.3% lower as compared to the same month last year, the Croatian Bureau of Statistics said on Wednesday.

Month on month, this was a nominal increase of 1.9% and a real one of 0.5%.

The real decline year on year is due to the high inflation, which has exceeded10% in recent months.

Median net earnings for May 2022 amounted to HRK 6,490.

The highest average net monthly earnings for May 2022 were paid in air transport (HRK 12,202) and the lowest in security and investigation (HRK 4,905).

The average monthly gross earnings per person in paid employment for May 2022 (HRK 10,440) were nominally 9.3% higher and really 1.4% lower as compared to the same month last year. Month on month, this was a nominal increase of 1.9% and a real one of 0.5%.

The highest average monthly gross earnings per person in paid employment for May 2022 were in extraction of crude petroleum and natural gas activities, amounting to HRK 17,889, while the lowest earnings were paid in manufacture of wearing apparel activities and amounted to HRK 6,309.

For the period from January to May 2022, the average monthly net earnings per person in paid employment amounted to HRK 7,538, which represented a nominal increase of 6.6%, but a real decrease of 1.2% as compared to the same period of 2021.

(€1 = HRK 7.5)

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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)

ZAGREB, 17 March 2022 - The government adopted a regulation on Thursday aimed at curbing the fuel price hike for distributors which will be in force until the end of the year, significantly reducing the environmental levy from HRK 0.30 to just HRK 0.01 per megajoules (MJ) for omitting to add biofuel on the market.

Reducing the levy from HRK 0.30 to 0.01 per MJ will result in a HRK 0.50 decrease per litre for consumers.

According to the incumbent regulation, if a distributor/supplier of petrol and diesel fuel does not add a mandatory minimum share of biofuel, they were obliged to pay a green levy to the Fund for Environmental Protection and Energy Efficiency.

Economy and Sustainable Development Ministry State Secretary Mario Šiljeg explained that the intention was to stabilise fuel prices in the aftermath of uncontrolled price hikes on the oil market, primarily caused by disruptions in supplies due to the Ukraine crisis.

The government also amended the regulation to provide additional protection to consumers, by intervening in the formula that determines the highest retail price of oil products which also takes into account the price related to the costs of transport and handling biofuel.

Fuel prices increased again on Tuesday with "Eurosuper 95" costing HRK 13 per litre which was an overnight jump of HRK 0.82 per litre. The price of Eurodiesel jumped by HRK 1.40 per litre while diesel premium price increased by HRK 0.15 per litre.

The government expects fuel prices to go down next week.

(€1 = HRK 7.5)

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ZAGREB, 17 Jan 2022 - Prices of consumer goods and services in Croatia, as measured by the consumer price index, increased by 5.5% in December 2021 compared with December 2020, while in the whole of 2021 they rose by 2.6% year on year, the State Bureau of Statistics (DZS) said on Monday.

The annual inflation rate in December was the highest since October 2008, when it was 5.9%.

Compared with November 2021, consumer prices on average stayed the same.

The highest year-on-year price increase was observed in transport, of 11.4%, which was largely generated by fuel price increases, of 22.5% on an annual level.

All other categories also recorded annual price increases, except the health sector which registered a decrease of 0.3%.

Food prices, which account for a significant portion of the goods basket, continued their rise that began in July, increasing by an average of 8.1% in December.

Prices of alcoholic drinks and tobacco increased by 5.9%, clothing and footwear by 3.7%, housing by 3.2%, and household furniture by 4%.

Compared with November, the highest increase in prices was registered for food and non-alcoholic beverages (+1.4%). Prices of clothing and footwear decreased by 8.2% and those of housing, water, electricity, gas, and other fuels by 0.2%.

The average annual inflation rate for the entire year was 2.6%.

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ZAGREB, 17 Dec 2021 - Prices of consumer goods and services in Croatia, as measured by the consumer price index, increased by 4.8% in November 2021 compared with November 2020, their highest rise since February 2013, the National Bureau of Statistics (DZS) said on Friday.

Compared with October 2021, consumer prices rose by 0.7%.

The highest year-on-year price increase was observed in transport, of 12.9%. It was largely generated by fuel price increases, of 26.6% on an annual level, reflecting increases in global prices of crude oil.

All other categories also recorded annual price increases. Prices of food rose by 6.0% and those of alcoholic drinks and tobacco by 5.6%.

Compared with October, prices of food and non-alcoholic beverages increased by 1.5% and of clothing and footwear by 1.3%, while prices of recreation and culture fell by 0.02%.

In the year to November 2021, the average annual inflation rate reached 2.3%.

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October 9, 2021 - When it comes to the inflation rate in Croatia, it will accelerate to 2.3 percent this year, and slow slightly to 2.1 percent in 2022, according to the Governor of the Croatian National Bank (CNB), Boris Vujčić.

The Governor of the Croatian National Bank (CNB), Boris Vujčić, said in the Croatian Parliament on Thursday that, unlike the forecasts of economic growth, the projections of inflation are dominated by negative risks, such as those that could lead to higher rates, reports Poslovni Dnevnik. In Parliament, where he presented the CNB's semi-annual information on the financial situation, price stability, and implementation of monetary policy in the second half of last year, Vujčić reminded of the CNB's projections for economic growth of 8.5 percent this year, and 1 percent in 2022, which he estimated, will have a positive impact on employment and wages.

"Due to the still great uncertainties, it is possible that these projections will not be realized, but unlike the previous ones, the positive and negative risks are balanced," said Vujčić. He explained that the negative risks to the economy relate to the possibility that the epidemiological situation in the euro area will worsen in the fourth quarter and the restrictive measures will be tightened, which would result in weaker foreign demand and negatively affect Croatian exports.

When it comes to inflation, it will accelerate to 2.3 percent this year, and slow slightly to 2.1 percent in 2022. In the previous part of the year, the acceleration of inflation occurred mainly under the influence of rising energy and food prices, said Vujčić, emphasizing that the projections of inflation are dominated by negative risks, ie those that could lead to higher rates.

Previously, in mid-September, Vujčić himself commented on the expectations about the inflation rate in Croatia regarding the next insertion of the euro as the official currency in the country, commenting about the situation in the United States, that ''it has a higher inflation rate, but the economy is overheated there, they also have strong fiscal stimuli that are stronger than European ones and I do not see that at this time such an inflation rate could happen in Croatia, we expect that year-round inflation rate to be 2.2 percent. This is, in principle, the goal of the European Central Bank, so we should not be concerned about that. The problem is if there is a change in expectations, wage growth, but we do not see that at the moment''.

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ZAGREB, 17 Sept 2021 - Consumer prices in Croatia rose by 3.1% in August 2021 compared with the same month in 2020, which is the highest inflation rate since April 2013, when it was 3.3%, according to figures released by the National Bureau of Statistics (DZS) on Friday.

The first stronger rise in inflation was recorded in April this year, of 2.1%. It slowed down to 2.0% in June, before picking up to 2.8% in July and 3.1% in August.

The rise is the result of the spillover of prices from global commodities markets, growing domestic and foreign demand, and a price convergence towards the EU average, notably with regard to services, analysts at Raiffeisenbank Austria (RBA) said in their comment on the DZS report.

The rise in consumer prices accompanied the rise in industrial producer prices, which grew by 9.3% in August 2021 compared with August 2020, their highest jump since January 2011. This year industrial producer prices increased by 3.5% in March, 5.8% in April, 7.6% in May, 7.2% in June and 7.9% in July.

Transport prices increased the most, by 9.9% compared with August 2020.

Compared with July 2021, consumer prices went up by 0.2% on average.

In the first eight months of 2021, compared with the same period of 2020, consumer prices rose by 1.7%. The greatest contribution to the rise came from energy prices, which increased by 5.2% on average. At the same time, consumer prices excluding energy rose by 1.0%.

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