Croatia posts among EU’s highest inflation rates in July

Croatia recorded one of the highest inflation rates in the European Union in July—4.5 percent, more than double the eurozone average. The rise is being felt most in everyday essentials such as food and services, experts said Monday on HRT’s morning program Dobro jutro, Hrvatska.

Hrvoje Stojić, chief economist at the Croatian Employers’ Association, explained that Croatia’s summer tourist season has a strong impact on inflation.

“During the summer, when the population doubles or even triples, we are primarily under pressure from the rise in prices of services due to tourism and the rise in food prices. In tourism, we are reaching the limits of price growth,” said Stojić.

Accommodation, cafés, and restaurants already exceeded the EU average last year, he added, and have risen even further this year—without generating real revenue growth. “For the third year in a row, tourism has recorded a decline in revenue,” Stojić noted, contrasting Croatia with Mediterranean competitors investing in modern hotels to attract higher-value visitors.

Stojić also pointed to agriculture as a major factor. Croatia imports far more food than it produces, with a trade deficit in food and farm products equal to about two percent of GDP.

“It is imperative for Croatia to have sufficient agricultural production in as many segments as possible that could be marketed through tourism,” he said. However, he argued that current regulations—including the Agricultural Land Act—favor “incentive hunters instead of real producers.”

Out of 185,000 registered agricultural producers, only 15 percent actually sell on the market.

Union leaders stressed that the inflationary squeeze is hitting households hard. Dražen Jović, president of the Independent Croatian Unions, said Croatian workers remain among the most underpaid in Europe.

“I have never seen people more outraged. A third of our citizens cannot go to the seaside. The total cost of our workers’ labor is 16.5 euros, while the European average is 33.5 euros,” Jović said.

He noted that Croatia’s minimum wage currently stands at 970 euros gross, with unions pushing for an increase to around 750 euros net.

Despite frustrations, Stojić emphasized that wages in Croatia have risen significantly in recent years. The minimum wage has increased by 92 percent over five years, while nominal salaries have grown by 72 percent since 2019 — 37 percent in real terms.

“Last year, strong state interventions in wage growth raised median income in terms of purchasing power by more than 20 percent compared with EU averages. It is not true that the standard has fallen; it has increased significantly,” Stojić concluded.