Ćorić: Accelerating inflation is a consequence of the "energy shock"

Finance Minister Tomislav Ćorić said on Tuesday that the acceleration of inflation in March is primarily a consequence of the energy shock and that it is "very difficult" to overcome some of the inflationary pressures resulting from the global rise in oil and gas prices, but that the government is doing everything it can in this regard and has some more tools at its disposal for the future.

The Croatian Bureau of Statistics (CBS) announced on Tuesday that the prices of goods and services for personal consumption measured by the consumer price index, according to the first estimate, were 4.8 percent higher on average in March compared to March 2025, while they increased by 1.4 percent compared to February. Eurostat data, however, shows that Croatia had the highest inflation in the Eurozone in March, 4.7 percent.

According to Minister Tomislav Ćorić, inflation accelerated in March primarily due to the "shock" of rising energy prices worldwide, including in Croatia, which is a consequence of the war conflicts in the Middle East.

“In the structure of Croatian inflation, an additional contribution to growth is made by the services sector. On the other hand, the good news is that prices of industrial products have fallen on an annual basis, as well as the fact that inflation in the food, beverages and tobacco segment amounted to 3.9 percent,” said Deputy Prime Minister and Minister of Finance Ćorić.

Namely, observed according to the main components of the index (special aggregates), energy in March increased in price by 11.3 percent compared to March 2025, services by 7.8 percent, while industrial non-food products became cheaper by 0.6 percent, according to data from the CBS.

The shock cannot be completely neutralized

Ćorić said that it is "very difficult" to overcome part of the inflationary pressures in the energy segment.

“Neither Croatia nor any other member of the Eurozone can avoid the imported inflationary shock that comes from the increase in oil and gas prices on world markets,” he said.

“With the measures taken in the past,” he said, “the government has partially absorbed and neutralized this shock, but it is simply not possible to do so completely.”

When it comes to the coming weeks and months, Ćorić hopes that the crisis in the Middle East will calm down, which should lead to a calming of oil prices.

“But if that does not happen,” he warned, “Europe, and Croatia in particular, will face a quite challenging period in the segment of energy prices.”

He also said that the government will do everything to make this impact on the Croatian economy as small as possible, with another part of the excise duty at its disposal, the European part, as well as some other tools "that we will consider".

When asked by a journalist whether he expects the EU to move towards a joint reduction in excise duties, and whether the government is considering introducing a "floating VAT", Ćorić said that he believes that all these topics will "be on the table" if the price of oil continues to rise or remains at these high levels. "That seems like a very logical option to me," he added.

Stojić: Increased imperative to invest in food security

Referring to the fact that Croatia has the "highest" inflation rate among the Eurozone countries, Ćorić reiterated that the Croatian economy is also growing significantly faster than the Eurozone average, which partly affects the increased inflation rates.

“However,” he said, “there is also the structure of the Croatian economy, which is something that cannot be escaped and which is definitely something that needs to be worked on continuously. It is not simple and cannot happen overnight", said Ćorić, who participated in a joint conference of the Croatian National Bank and the EIB, dedicated to the digital transformation of the Croatian economy and the use of artificial intelligence.

On the sidelines of the conference, the chief economist of the Croatian Employers' Association (HUP) Hrvoje Stojić also commented on the latest inflation data, saying that in Croatia over the past six months, food prices have "moved more favorably" compared to the Eurozone average, which means "that before the current crisis we had certain signs of stabilization".

“It is very uncertain to predict what will happen in the coming period, because,” Stojić said, “everything depends on the duration of the war in the Middle East.”

In the context of a potential increase in food prices, he noted that Croatia is quite exposed to its imports.

“At this moment, this further reinforces the imperative that Croatia needs very significant investments in agriculture, food production and strengthening productivity,” Stojić said.

The April session of the ECB Governing Council is also in focus due to a possible increase in interest rates

Speaking about the updated macroeconomic projections of the Croatian National Bank and the European Central Bank, the Governor of the Croatian National Bank (CNB) Boris Vujčić said that inflation will certainly increase due to events in the Middle East, and the longer the conflict lasts and the greater the destruction of energy infrastructure, "higher and longer" pressures on energy prices can be expected, which would then also affect the general increase in prices.

According to the CNB's projections, Vujčić said, in 2026 Croatia will see slower GDP growth compared to the December 2025 forecasts, while on the other hand, inflation will grow faster this year - 4.6 percent in the base scenario, 5.6 percent in the unfavorable scenario, and seven percent in the worst-case scenario.

“Now the only question is how the situation will develop in the coming days, weeks and months, primarily with military conflicts (in the Middle East, ed.),” said the current CNB governor, who was recently appointed Vice-President of the ECB.

Vujčić also said that the ECB will assess inflationary pressures at its meeting in April this year, based on available data, and possibly decide whether to react to them with "monetary policy".

When asked by a journalist whether it was certain that the ECB would raise interest rates in April, Vujčić said that "nothing is certain", repeating that a decision on this would be made "based on incoming data and news".

Source: HRT