How Will Inflation Measures Affect Average Croatian Household Budget?

By 19 February 2022

February the 19th, 2022 - With rising energy costs, with a particular emphasis being placed on fuel and gas continuing to pose issues to both business owners and average citizens alike, just how will government inflation measures really affect the average Croatian household budget?

As Poslovni Dnevnik writes, after the government presented its inflation measures to attempt to mitigate the impact on people's standards, the country's residents, especially those who use natural gas for their heating, have begun to calculate precisely how much each of these measures will have an impact on the average Croatian household budget.

It should be noted that the government has decided to lower the VAT on gas from 25 down to just five percent, and that will be the case from April the 1st this year to March the 31st next year. After that period, gas and heat will remain permanently at the VAT rate of 13 percent, meaning that they will both be equated with the costs of electricity. In addition, the government will subsidise the price of gas to all households, with direct support of 10 lipa per kilowatt-hour, or about 20 percent of the projected price of 66 euros per megawatt-hour. The measure related to this subsidy will cost 600 million kuna.

Guided by this data, Glas Slavonije/The Voice of Slavonia writes that when it comes to gas, it would have been as much as 76 percent more expensive as of April the 1st, but with these recently revealed government measures, this increase will amount to a maximum of 20 percent, depending on stock market prices.

The average family in Croatia now pays 4,950 kuna a year for gas. Without any government intervention, this annual cost would increase by a worrying 3,762 kuna, meaning that the average Croatian household budget would need to allocate a much higher 8,712 kuna or 726 kuna per month for gas. Only by lowering the VAT rate from 25 percent down to five percent would bills grow by 48 percent, or by 2,376 kuna, and with a direct subsidy to households, the increase would be up to 20 percent. This means that as of April the 1st, the average Croatian household budget will have to allocate up to 990 kuna more for gas, or 82.50 kuna more per month.

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