Inflation continues to be a problem for most households in Croatia. In spite of economists' assurances that inflation will halve over time, for months now it has significantly affected the living standard of Croatian citizens who are yet to face the announced increase in energy prices.
Initial claims from political leaders and economists that the inflation is transitory, appear to have been, at the very least, optimistic. Retail chains are reporting that suppliers are have raised prices by five times their pre-inflation level, this has had a spill-over effect into small producers. Data from the United Nations' Food and Agriculture Organization shows that in 2021 the price of vegetable oil jumped by as much as 65% percent, while grains jumped by 30%.
And while the government intervened on the energy market late last year, in a bid to stop spiraling gasoline, natural gas and electricity prices, it appears as though government has severely underestimated the extent of what is coming. According to media reports electricity prices being offered by suppliers at tender, were 130% higher than initially planned. For this reason the tenders were voided. And while businesses are already paying the market price, energy consultant Davor Štern says there are ways to ensure that households are not hit with this drastic price hike: “We'll see what will happen from now until April 1st. But even then government has mechanisms to soften the price shock. It can always turn to some kind of subsidy program.”
This has already been done by some other European countries. However, Croatia is also facing another problem, and that is the rounding-up phenomenon as it prepares to adopt the Euro as its currency.
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