Inflation debate intensifies in Sabor as prices continue to rise

Croatian lawmakers on Thursday debated inflation following the release of the latest report from the Croatian National Bank.

Deputy Governor Sandra Švaljek told parliament that, given the conflict in the Middle East, inflation is likely to remain at last year’s levels or rise slightly. She added that the central bank will publish updated projections by the end of the week, incorporating multiple scenarios that account for the ongoing conflict.

The opposition warned that persistently high inflation is leaving average Croatian households with little money after covering monthly expenses. Meanwhile, lawmakers from the ruling Croatian Democratic Union (HDZ) highlighted Croatia’s investment-grade credit rating as a boost for businesses and consumers. They also praised government measures aimed at cushioning the impact of rising prices, particularly for low-income households.

HDZ MP Majda Burić said Croatia would be in a far worse position without government intervention, noting that more than €8.5 billion has been spent on subsidies and aid. Švaljek added that price caps on some basic goods have had only a modest impact on inflation overall, but a positive social effect.

“It enabled certain staple products to remain accessible to those in the most disadvantaged position, who were perhaps the hardest hit by inflation,” she said.

From the opposition Social Democratic Party of Croatia (SDP), MP Ivan Račan asked whether Švaljek agreed with Prime Minister Andrej Plenković that inflation was artificially generated. She responded that Croatia’s prolonged inflation was largely driven by strong economic fundamentals, including higher growth, increased consumption, rising employment, and faster wage growth compared to the rest of the Eurozone.

Ante Kujundžić of MOST questioned where the benefits of rising wages and pensions were going.

“Where has that money gone when we go to the grocery store?” he asked.

Švaljek replied that cumulative inflation since mid-2021 stands at around 35 percent, while average wages have risen by roughly 50 percent over the same period.

“Such inflation creates winners and losers, because not all salaries have grown equally. On average, however, real wages have increased and have more than compensated for rising prices,” she said.

The opposition also stressed that inflation in Croatia remains about twice the Eurozone average.

“This is serious, especially given the European Central Bank target of two percent,” said SDP MP Boris Lalovac.

Lalovac pointed to February inflation data, which showed a 3.8 percent annual increase, with particularly sharp rises in housing and utilities.

“Garbage collection is up 12.7 percent, water 3.9 percent, electricity 12 percent, gas 10 percent, while rents have increased by 40 percent compared to February 2025,” he said, noting that these increases come even before factoring in the impact of the Middle East conflict.

He warned that the government faces a highly challenging period ahead and cannot rely solely on price freezes and caps to bring inflation under control.