Government plans to phase out energy subsidies, SDP warns of inflation spike

The Croatian government says it will gradually phase out energy subsidies introduced to cushion households and businesses from inflation.

The opposition Social Democrats (SDP) warn the move will push inflation higher and are demanding an impact analysis before any cuts take effect.

EU member states have been advised to wind down energy subsidies, but the SDP argues Croatia is especially vulnerable, since its inflation is already above the EU average.

SDP leader Siniša Hajdaš Dončić questioned the government’s reasoning:

“What is the basis for this, especially when it is clear that reducing these measures will affect inflation? If you propose something, you have to show the analysis,” he said Friday.

The party’s chief economic analyst, Josip Tica, added that even announcing subsidy cuts fuels inflation.

“Speculation begins the moment the media reports on it,” he said.

SDP officials also criticized the government for celebrating GDP growth and low unemployment while wages remain far below the EU average.

“After all these salary hikes, we’re still at only 46% of the European average,” said Branko Grčić, head of the party’s Regional Development Council.

The SDP argues that at least half of current infrastructure spending should be redirected toward boosting economic productivity.