ZAGREB, 11 March 2022 - The EU proved to be part of the solution in the COVID crisis and will have to react also in the new situation after Russia's invasion of Ukraine, by capping energy prices among other things, including globally to prevent speculation, Croatian Prime Minister Andrej Plenković said on Friday.

"After the Russian invasion, we have three tragedies, the biggest is the one of the Ukrainian people, the second is the big refugee crisis, and the third is the enormous rise in energy prices," he said in Versailles after a two-day informal EU summit.

The EU proved to be very good in dealing with the pandemic crisis by establishing the special Next Generation EU instrument and through common vaccine procurement and distribution as well as job-retention, Plenković said.

"Now it's necessary to help our fellow citizens and the economy again. It's best to cap energy prices, but this must be a global action. It's not good if someone profits from speculative prices, that's immoral."

Energy and food cannot be treated as other commodities, Plenković said. "We have entered a new phase after Russia's attack on Ukraine in which energy and food will be our strategic resources and we should adapt to that."

He said the countries taking in the largest numbers of Ukrainian refugees would need financial aid as a huge refugee wave could be expected.

In just two weeks, over two million people from Ukraine have arrived in the EU, while about a million people came during the 2015 refugee crisis.

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ZAGREB, 18 Feb 2022 - Prime Minister Andrej Plenković said on Friday that the package of measures for cushioning the electricity and gas price rises, worth HRK 4.8 billion, was a wise state intervention that would, as of 1 April, protect citizens and a large part of the economy from rising energy prices.

"This way, we are showing the government's readiness to make a wise intervention that benefits citizens in key moments," Plenković said, talking about the package of measures at a government session.

The measures apply to all citizens, a large part of the economy, especially micro and macro businesses, and special measures have been introduced for socially vulnerable groups, as well as for pensioners, farmers, and fishermen, the prime minister said.

"In addition to the caps on the prices of petroleum products, we have made a good, clear framework which also involves tax relief, social transfers, and subsidies, and which will cushion the price rise as of 1 April," he said.

The prime minister also said that over the past two days, based on well-prepared documentation for the European Commission, it had been decided that the deadline for using the money from the European Solidarity Fund for earthquake relief in Zagreb would be extended for another year, from June 2022 to June 2023, to overlap with the deadline for the use of money allocated for the earthquake in Banovina.

He said that he now expected "intensive work and dynamics of the reconstruction process" in order to use that money and engage other sources and ensure as soon as possible that the reconstruction process would accelerate.

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ZAGREB, 18 Feb 2022 - Retailers won't increase their margins and the price of food will go down, the Večernji List daily reported on Friday, citing the Lidl supermarket chain which has announced lower prices as of March already, one month before the government's decision to cut VAT rates on certain food products goes into force.

Prices for all categories for which the government has decided to lower VAT will certainly fall. Retailers will not increase their margin because nobody can afford to be more expensive than their competition, and when margins remain stable, prices will decrease by the difference in VAT, the president of the board of the NTL supermarket retail chain, Martin Evačić, said.

The government's measures announced earlier this week foresee VAT to fall as of 1 April, from 13% to 5%, on fresh meat and fish, eggs, fruit, vegetables, edible oil, lard, and children's food, and also in agriculture (seedlings, fertilizer, pesticides), while VAT on butter and margarine will decrease from 25% to 5%.

Evačić, who is the president of the Retailers' Association at the Croatian Employers' Association (HUP), underscored that the concentration of retailers on the Croatian market is too high and that consumers watch how they spend every kuna. The lower VAT will mean a decrease in budget revenue, however, with the lower prices demand could be greater, which could offset the effect of the lower revenue and ensure the same profit for retailers.

Some retailers have announced the price of flour and bread could go up again in March by an average of 10% so we are yet to see if some of the government's measures will prevent that increase, Evačić says.

The Konzum supermarket retail chain has announced that it will reduce the prices of more than a thousand items as of Monday, 21 February, including fruit and vegetables, meat and fish, eggs, edible oil and lard, butter and margarine, children's food, and hygienic pads and tampons.

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ZAGREB, 12 Feb 2022 - Social Democratic Party (SDP) leader Peđa Grbin said on Saturday that this incompetent government should be forced to do at least something to make people's lives easier in the present time of high inflation.

Speaking at a press conference in the southern coastal city of Split, Grbin said that the government should have acted four months ago rather than announce only yesterday measures that he did not expect would improve people's lives.

He acknowledged that the only thing the government had done then was cap fuel prices, which  increased again as soon as the prices were unfrozen.

Grbin said that fuel prices could only jump unless there were other measures, such as those proposed by the SDP, including the new method of VAT calculation for fuel, reduction of excise taxes, and floating excise taxes.

Speaking of the measures for combating inflation, he said that the government should show empathy and responsibility and change the present system. There are a lot of measures that can be taken, such as tax cuts on food and introducing an inflation allowance for pensioners, he added.

A s a long-term measures, the SDP proposes a change to the method of pension indexation to at least slightly improve life for pensioners and make their life more decent.

MP Branko Grčić said that the government was slow in responding to inflation and that it should change the method of VAT calculation for fuel and introduce an inflation allowance for pensioners because as many as 600,000 of them lived on the brink of poverty.

Commenting on a recent threat by Split's deputy mayor, Bojan Ivošević, to a Slobodna Dalmacija newspaper editor, Grbin said that in a country where the prime minister treats reporters arrogantly such behaviour has become normal rather than the exception. 

Grbin said that what Ivošević had done was unacceptable and should never happen. "A threat in itself is unacceptable, and making a threat just because an official is not satisfied with the way a newspaper writes about him is a step beyond that," Grbin said.

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ZAGREB, 10 Feb 2022 - The European Commission on Thursday significantly revised up its forecast for Croatia's economic growth in 2021 to 10.5%, which is the second-highest growth rate in the European Union after Ireland, while downgrading its projections for this year and next compared to its autumn outlook.

The European Commission released its Winter Economic Forecast on Thursday, saying that the Croatian economy achieved a full V-shaped recovery in 2021, surpassing the level registered prior to the 2019 crisis.

After a fall of 8.1% in 2020, the Croatian economy is estimated to have grown by 10.5% in 2021. The only other EU member state with faster growth is Ireland, with a rate of 13.7%.

In its autumn forecast, released in November 2021, the Commission projected Croatia's growth for last year at 8.1%.

As far as inflation is concerned, it is forecast at 2.7% for 2021, 3.5% for 2022 and 1.6% for 2023. These figures are at the level of the euro area average and slightly lower than in the EU overall.

The Commission expects the Croatian economy to grow at a rate of 4.8% this year (compared to 5.6% forecast last autumn) and at 3% next year (the autumn forecast was 3.4%).

After strong growth in the second and third quarters of 2021, growth is expected to have slowed down in the fourth quarter based on short-term indicators of economic activities and price increases.

Exports of commodities and services contributed to the recovery, with tourism playing a key role as well as personal consumption.

Although a strong increase in demand for finished products led to a growth of imports, the contribution of net exports to growth will remain positive.

Investment is also expected to increase, reconstruction should be stepped up after the earthquakes in Zagreb and the Banovina region, as are favourable financial conditions and the implementation of the National Recovery and Resilience Plan (NPOO).

The revised budget indicates that government spending will make a positive contribution to this year's growth.

The risk balance is slightly tilted to the downside, mainly due to problems in implementing projects following the earthquakes. which could negatively affect investments.

This year, inflation could be 3.5% compared to 2.7% last year, mostly due to increased commodity prices. The high inflation rate in the first half of the year is expected to slow down in the rest of the year. Inflation will be most affected by prices of energy and unprocessed food. It is expected to fall below 2% in 2023.

The Commission estimates that after a growth of 5.3% last year, the EU economy will grow at a rate of 4% this year and 2.8% next year. Growth in the euro area is forecast at 4% in 2022 and 2.7% in 2023. The EU as a whole reached pre-pandemic levels in the third quarter of 2021 and all member states are expected to return to pre-pandemic levels before the end of 2022.

ZAGREB, 8 Feb 2022 - Social Democratic Party leader Peđa Grbin on Tuesday presented a proposal designed to help alleviate the impact of growing inflation on pensioners in the form of a pension allowance bonus for allowances amounting to less than HRK 4,000, proposing also adjustment of pensions to wage and inflation growth.

"Croatian pensions are low and at a time of growing inflation they become even lower, which requires action. The government is late with responding, it first capped fuel prices for two months, which was insufficient, and now it has to cap them again at a higher amount," the SDP leader told a news conference.

Long and short-term measures for pensioners

Other countries introduced measures to alleviate the inflationary effects of euro adoption a year before adopting the euro, while in Croatia a bill on euro adoption is still under public consultation, Grbin said.

"We cannot expect its entry into force before April, and neither can we expect before that date measures that should cushion the inflationary blow to citizens," he said, proposing two measures to help pensioners.

One is a long-term measure envisaging a change of the model of adjusting pensions to wage and inflation growth, and the other is a short-term measure in the form of an inflation bonus.

SDP MP Branko Grčić said the current adjustment of pensions did not follow wage growth. Five years ago, when the incumbent government took over, the average pension accounted for around 40% of the average wage while now it accounts for less than 37%, he said.

Grčić said that if inflation growth was higher than the growth of wages, pensions should be adjusted 100% to the inflation rate, and if the wage growth was higher, pensions should be adjusted to the wage growth rate.

Average pension could drop below 30% of average wage

Had this model been used over the past five years, the average pension, which now amounts to HRK 2,645, would have been HRK 200 higher, Grčić said, warning that if the current model of pension indexation was not changed, the average pension would fall below 30% of the average wage in the next 10-15 years.

SDP MP Boris Lalovac believes that the parliament can introduce the inflation bonus already this month so that pensioners can receive it in April.

"The government has said it will give a HRK 200 bonus only to pensioners with guaranteed minimum allowances, and there are around 60,000 such pensioners. We believe that the scheme should be expanded... to cover around 850,000 pensioners whose pension allowance is below HRK 4,000, which would cost up to HRK 700 million," said Lalovac.

The SDP proposes that pensioners whose allowance is below HRK 1,500 should receive a one-off bonus in the amount of HRK 1,200, those whose pension amounts to HRK 1,500-2,000 should get a HRK 1,000 bonus, those with pensions ranging from HRK 2,000 to 3,000 should receive a HRK 600 bonus, and those with pensions ranging from HRK 3,000 to 4,000 a bonus of HRK 400.

Lalovac said that the state budget was the biggest winner at a time of inflation growth, which was why there should be no problems in securing funds for the inflation bonus for pensioners.

Everything supposed to be creative turns into corruption in Croatia

Grbin also commented on a scandal involving the falsification of the motif on the national side of the €1 coin, saying that "everything that is supposed to be creative turns into corruption in Croatia."

If the process of selecting the best designs for the national sides of euro coins had been conducted by professionals, if the profession had been consulted, this whole affair would not have happened, Grbin said, adding that not only the central bank but the government, too, was responsible, as it was quite late with the process of euro introduction.

Grbin believes the call for applications for the design of the national sides of euro coins should be repeated despite the lack of time.

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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ZAGREB, 17 June 2021 - Annual inflation in the European Union and the euro area in May reached its highest level in nearly two and a half years, while consumer prices in Croatia increased the strongest since the country joined the EU, according to a report released on Thursday by the EU statistical office, Eurostat.

The EU inflation rate rose to 2.3% in May, its highest level since October 2018, from 2.0% in April.

In the euro area, the inflation rate was 2.0%, up from 1.6% in April, also its strongest increase since October 2018.

In May 2020, when economic activities and social life virtually came to a standstill due to the COVID-19 pandemic, inflation amounted to 0.6% in the EU  and 0.1% in the euro area.

Croatia alongside Germany, Spain, and Sweden

The highest annual rates were recorded in Hungary (5.3%), Poland (4.6%), and Luxembourg (4.0%).

Croatia ranked alongside Germany, Spain, and Sweden with an annual inflation rate of 2.4%, the highest increase since August 2013. In April the annual inflation rate in Croatia was 2.1%.

In May last year, prices in Croatia fell by 0.7% on the year.

The lowest inflation in May was registered in Portugal and Malta at 0.5% and 0.2% respectively.

The only country to register a decrease in prices was Greece (-1.2%).

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