Monday, 7 February 2022

Stjepan Pranjković Withdraws His Croatian Euro Coin Design Proposal

February 7, 2022 - After four days of controversy over an alleged case of plagiarism, Stjepan Pranjković finally decided to withdraw his Croatian euro coin design proposal.

On February 4, Total Croatia News shared the official announcement by the Government and the Croatian National Bank (CNB) regarding the four winners of the Croatian euro coin design proposal competition. In a government session that day, it was confirmed that the 2 euro coin would feature the geographical map of Croatia; the 1 euro coin would feature the kuna, the symbolic animal of Croatia; the 50, 20, and 10 cent coins would feature Nikola Tesla; and that the 5, 2 and 1 cent coins would feature the Glagolitic alphabet.

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Stjepan Pranjković with Boris Vujčić, Croatian National Bank Governor. (Photo: Igor Kralj/PIXSELL)

The four winners were present at a symbolic event after the session, where each one offered more details about the creative process behind their Croatian euro coin design proposal and also received a special gift from the Croatian National Bank. It is also known that each of the winners would receive a prize of 70,000 kunas.

Public reaction was mixed. While some applauded the designs, some others criticized them. Many, for example, considered that choosing the map of Croatia was a very simple and easy idea, and others also called Nikola Tesla's coin part of political propaganda about the debate on its origins.

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However, the biggest controversy would come the next day when suspicions began to spread on social networks about an alleged case of plagiarism. Some people found the design of the one-euro coin quite familiar, specifically because of the kuna animal layout. Thus, several users began to find little coincidence in the resemblance between the design of the coin and the image of the British wildlife photographer Iain H Leach of a pine marten, the name by which the animal is known in English.

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Shortly after, they managed to make contact with Leach, who in turn expressed his ignorance of what happened and, in addition, criticized that his permission was not requested to use an image that in the end would win a prize of at least 9,300 euros. Some users even shared a screenshot in a public Facebook group called Bring Your Own Laptop Online, where Pranjković would have asked for help to transform the photo into editing software, by adding special lighting effects to give it a metallic look.

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Finally, after several days of intense criticism, Telegram.hr reports that Pranjković sent a letter to the Croatian National Bank in order to withdraw his proposal and also apologize for the unpleasant atmosphere created by the controversy.

"It was a great honor for me to participate in the process of selecting the national side of the Croatian euro coin. However, motivated by the unpleasant atmosphere created in the media and social networks, as well as the pressures I was exposed to regarding my design of the reverse of the one euro coin with a kuna motif, I decided to withdraw my design proposal for this motif and waive any rights to on the basis of participation in the competition for the motif of a one-euro coin", said Pranjković.

"I made this decision so as not to aggravate this situation or contribute to further possible uncertainties. I am sorry that there have been controversies regarding my work that could harm this important process for the Republic of Croatia. I did not intend to hurt anyone's feelings, so I apologize to everyone, especially to the Croatian National Bank, the Government and the Croatian public ", concluded Pranjković.

The CNB's Money Commission announces that it will hold an emergency session today and will comment on Pranjković's letter. By the way, after the media suspected that Pranjković used someone else's photo for his design, the CNB's Commission reported yesterday that they had launched an urgent inspection of his design.

Speculation regarding the possible alternatives has been present on social networks, with some proposing that the original photographer be credited, that another design be used that also has the kuna as a motif, and others also propose that an entirely different motif be used. However, the outcome of the Croatian euro coin design proposal is uncertain pending the CNB investigation.

For more, check out our lifestyle section.

Sunday, 6 February 2022

Croatian National Bank Investigating Stolen Croatian Euro Coin Kuna Design

February 6, 2022 - The Croatian National Bank is consulting with legal experts about the potentially stolen Croatian euro coin kuna design by Stjepan Pranjković, which is oddly similar to a photograph of a kuna animal found on the Internet by British photographer Iain H Leach.

The CNB will publish its comment on Monday, writes Večernji List.

The author of the photograph, Iain H. Leach, was not asked for permission to use his photograph.

"Yes, it looks like someone took my photo without my permission and used it to design a new Croatian coin. They told me it was a competition and that design won. I also heard that the winner received a cash prize. I didn't get anything. He's a thief. He took my photo and picked up the prize. I think that those who organized it should withdraw the cash prize and name the real author of the photo on which the Croatian coin was made," Leach told 24 Sata.

"I am amazed at the interest from Croatia. A lot of good people from Croatia contacted me about this, and I didn't hear anything about it until two days ago," stated Leach for N1

“I don’t mind the photo being used as a motif for the coin and I would be glad to see it there. However, I would like to be officially recognized as a photographer and receive a usage fee. Also, I don't think that the person who stole my photo should be rewarded with almost 10,000 euros for something that was copied," concluded the photographer for N1. 

The Government told N1 that the competition to select the winning designs was led by the CNB from the beginning to the end.

"The competition for selecting the design was led from the beginning to the end by the CNB, through the Selection Committee (with external members) and the CNB's Permanent Money Commission, which otherwise decides on the design of commemorative coins. All contestants had to submit a statement guaranteeing that they are the owners of the copyright of the artistic solution that they applied for," the Government said for N1.

Recall, earlier this week, the Croatian Government presented the winning designs for the new Croatian euro coins. Various motifs were chosen - the coat of arms (šahovnica), a map of Croatia, a kuna (marten), Nikola Tesla, and the Glagolitic alphabet.

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The kuna design, however, is familiar to a photograph of a kuna by a British photographer Iain H Leach. Many comments on social media pointed out the similarities between the kuna on the coin and the outline of the kuna in the photograph, primarily noticing the similar pose, the branch, but also smaller details, such as the position of the tail or the white color found on the animal's neck.

 

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Leach also joined the discussion on Twitter.

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"I hope the author of the Croatian euro coin design contacted you and paid you for the rights to the photo because the coin looks the same as your photo," one person wrote on Twitter, and he responded quickly. "Thanks for letting me know. Not sure what I can do, maybe they'll send me a free coin," Leach said. Twitter users soon began advising him to file a lawsuit.

This photo can be found in the photographer's kuna gallery on his website and around the Internet. This photograph is also provided by Google if "pine marten side view" is entered in the search engine. Pine marten is the English name for the kuna. 

The author of the Croatian euro coin design received HRK 70,000

The kuna motif will be on the 1 euro coin, and next to it will be the word "Croatia," and the year they introduced the euro - 2023. The author of the best design for this coin is Stjepan Pranjković, Master of Applied Arts.

Pranjković received HRK 70,000 for his winning design. His other two solutions won second place, receiving HRK 35,000. In total, he received HRK 140,000.

There are also posts on the Internet in which Pranjković asked for help in a group on Facebook on how to process a photo for a coin.


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By the way, 295 design proposals were accepted for the kuna coin. The Croatian Commission for the Selection of Artistic Design Proposals selected the nine most successful proposals and submitted them to the CNB. Finally, in the second round of the tender, the CNB's Money Commission selected the three most successful design proposals.

The CNB published a document in which they explained the awarded works. Among them, they explained the motif of the kuna that will adorn the 1 euro coin, which is identical to the British photographer's image.

"The author of the award-winning work decided on a realistic depiction of the kuna animal. He very successfully graphically highlighted the figure of the kuna using a different surface texture, which contributed to the realistic depiction.

The author skillfully used the relationship between the given elements, so he uses straight and sharp chessboard lines as a frame of motifs and contrasts them with wavy lines in depicting the marten animal and the branch on which it stands. The position of the obligatory elements, which are placed along the edge of the inner part of the coin, additionally frames the motif and emphasizes its position," explains the CNB.

For more, check out our lifestyle section.

Monday, 31 January 2022

HNB: Household Deposits Increase by 9.2%, Loans by 4.5%

ZAGREB, 31 January 2022 - In 2021, household loans went up by 4.5% to HRK 141.5 billion on the year on the back of a strong rise in housing loans, while household deposits went up by 9.2% to HRK 246.1 billion, the Croatian National Bank (HNB) said on Monday.

At the end of 2021, monetary institutions' lending to domestic sectors, except the central government, totalled HRK 245.8 billion, up 3.9% on the year.

Loans totalled HRK 238.9 billion, of which HRK 141.5 billion were household loans, HRK 86 billion were corporate loans, and HRK 11.4 billion were loans to other domestic sectors.

Housing loans totalled HRK 67.8 billion, up 9.2% from the end of 2020. Non-purpose cash loans went up by 2.3% to HRK 53 billion.

Loans to non-financial companies went up by 1%, as against a 6% increase at the end of 2020. Their bonds went up by 58.7%. Corporate loans went up by 2.3%, as against a 2.3% increase at the end of 2020.

Month on month, monetary institutions' lending in December 2021 was up by HRK 2.8 billion (+1.1%). Loans went up by HRK 1.7 billion (+0.7%). Loans to non-financial companies were up by HRK 1.4 billion (+1.6) and those to other domestic sectors by HRK 400 million (+3.6%).

Household loans decreased by HRK 100 million month on month, as did non-purpose cash loans, while housing loans increased by HRK 300 million.

At the end of 2021, deposits reached HRK 365.8 billion, up by 35.5 billion on the year (+10.8%). Money on transaction accounts increased by HRK 13.6 billion (+21%).

(€1 = HRK 7.5)

For more, check out our dedicated business section.

Monday, 17 January 2022

Central Bank Governor: Citizens Hold Cash Amounting to HRK 36 Billion

ZAGREB, 17 Jan 2022- Croatian National Bank Governor Boris Vujčić said on Monday that inflation might be the most serious potential "cost" of introducing the euro, however, this year, that influence on the total inflation rate could be less than 10%, so he believes this isn't something to be overly bothered about.

Vujčić added that the rest of the inflation will be generated from entirely different sources, primarily the prices of energy. He expects that the first half of this year will see strong inflationary pressure whereas "deflating" is expected in the second half.

Vujčić said that the best prevention against prices increasing is competition, adding that state intervention is only justifiable where monopolies exist. In the months prior to and after introducing the euro, consumers have to avoid those who increase their prices and buy from those who don't, he said, believing that the best protection against price increases is showing prices in both kuna and euro.

With regard to losing monetary sovereignty once Croatia enters the euro area, Vujčić recalled that the central bank has been maintaining a fixed exchange rate since the 1990s.

Hence, it is not using it actively as a monetary policy instrument, considering that a 10 percent depreciation of the kuna against the euro, due to the high level of ''euro-zation'' of the economy and households, the debt for all sectors in Croatia would increase by more than HRK 50 billion whereas appreciation of the kuna would disrupt the Croatian economy's competitiveness, that is exports, said Vujčić.

He revealed that fairly reliable data indicate that citizens are holding as much as HRK 36 billion in cash. He called on citizens to deposit cash in banks which would facilitate conversion once Croatia enters the euro area.

(€1 = HRK 7.5)

For more, check out our dedicated politics section.

Monday, 17 January 2022

HNB Governor Says Not Thinking of Resigning

ZAGREB, 17 Jan 2022 - Croatian National Bank (HNB) Governor Boris Vujčić said on Sunday he was not thinking of resigning and called on the financial regulator HANFA to look into the veracity of media reports of financial wrongdoing at the central bank.

"We certainly didn't do anything wrong," Vujčić told RTL television in a comment on the article by the Index news website saying that 40 HNB staff had been involved in insider trading in securities.

Vujčić urged HANFA to look into the allegations, stressing that the HNB wanted the matter clarified as soon as possible. He said that the regulator had access to all the data, both at the HNB and the Central Depositary Agency.

He said it was not the HNB staff that had caused damage to the central bank but the media fuss that was made without any evidence.

Vujčić said that he always adhered to the law in his work. In 2001, when he joined the HNB leadership, he had sold his shares in two banks to avoid a potential conflict of interest, he added.

He said that the HNB had adopted a code of ethics in 2016, which requires all staff to report to their superiors if they trade in banks' securities.

"If anyone is found to have traded in insider information from the HNB, they will immediately lose their job and that will not be the end of problems for that person. At this point we do not have any indications that something like that happened," the central bank governor said.

Vujčić said he was not thinking of resigning. He noted that in his opinion this whole affair was aimed at undermining the process of adopting the euro, adding that this attempt would not succeed.

"These unsubstantiated accusations in the public sphere and partly in the political sphere are certainly undermining the credibility of the institution," he said.

Vujčić said he would not be attending the presentation of the Euro Act on Monday.  Asked how was it that he was not invited, he said the question should be addressed to the prime minister.

For more, check out our dedicated politics section.

Tuesday, 4 January 2022

HNB: Total Loans Reach HRK 237.6 bn

ZAGREB, 4 Jan 2022 - The volume of loans issued in Croatia totaled HRK 237.6 billion at the end of November 2021, which is an increase of 3.7% compared with November 2020, according to data from the Croatian National Bank (HNB).

Total lending by monetary institutions to domestic sectors (except the central government) was HRK 243.4 billion, an increase of HRK 700 million or 0.3% compared with October 2021 and of 4.5% compared with November 2021.

Loans accounted for the majority of lending, reaching HRK 237.6 billion in November 2021. They increased by 0.3% from October 2021 and by HRK 8.5 billion or 3.7% from November 2020.

Broken down by sector, compared with October 2021, corporate loans increased by HRK 400 million, or 0.5%, to HRK 84.8 billion, while household loans rose by HRK 200 million, or 0.2%, to HRK 141.8 billion. A slight rise, of HRK 100 million or 0.5% to HRK 11 billion, was also observed with other financial institutions.

The majority of household loans included housing loans, which increased by HRK 300 million or 0.4% month on month to HRK 67.5 billion, while general-purpose cash loans remained almost unchanged, at HRK 53.3 billion.

Compared with November 2020, corporate loans rose by HRK 600 million or 0.7%, and household loans by HRK 5.7 billion or 4.2%. Loans to other domestic sectors went up by HRK 2.2 billion or 25.1%.

On an annual level, total loans to households slowed down from 4.9% in October to 4.8% in November, reflecting the slowdown in the growth of housing loans, from 11.3% to 10.5%, due to the marked growth of subsidized loans issued in the same period of last year.

The slowdown in household lending on an annual level was partly mitigated by the stagnation of general-purpose cash loans, which decreased in the same month of the previous year, which increased their annual growth rate from 1.6% to 2.0%. On the other hand, corporate loans continued to accelerate on an annual level, from 1.8% to 2.2%, after stagnating earlier in the year.

(€1 = HRK 7.5)

For more, check out our dedicated business section.

Monday, 3 January 2022

Euro Membership to Better Protect Croatia in Times of Crisis, Says HNB Governor

ZAGREB, 3 Jan 2022 - The membership of the euro area will provide Croatia with better protection in periods of economic crisis, the National Bank (HNB) Governor, Boris Vujčić, told the national broadcaster's (HRT) evening news program on Sunday.

The euro changeover is expected in one year's time, and Governor Vujčić said that a lot of logistical preparations lay ahead.

"We hope that we will enter the euro area in a year's time, and 2022 is the year of preparations," said Vujčić.

The final decision on the date will be known this summer, however, we are making preparations to be ready for the euro changeover on 1 January 2023, he said adding that the central bank, commercial lenders, and the enterprise sector are now due to make preparations for the introduction of the euro.

Dual display of prices

As of this summer, all should be ready to express prices both in the national currency and the euro, said the governor.

He also noted that the country should be ready to provide the market with the euro banknotes and coins upon the transition to that currency.

Asked about the pros and cons of the admission to the euro area, Vujčić said that Croatia would be provided with better protection in the cases of crisis.

The euro adoption will remove the currency exchange risks, and in this segment, Croatia will have the biggest advantages, since its economy is more euroized than any other euro area candidate so far, he explained.

A majority of time savings deposits are tied to the euro, he said adding that for instance, 10% depreciation of the kuna in terms of its exchange rate versus the euro would increase the debt of all the sectors by HRK 50 billion. This is a huge risk that can cause a recession, and our entry into the euro area will remove that risk, he said.

He added that there are currently 36 billion kunas in cash in circulation, and in the next 12 months the money should be either deposited with banks or spent.

The Croatian kuna joined ERM (Exchange Rate Mechanism) II on 10 July 2020 and observes a central rate of 7.53450 to the euro with a standard fluctuation band of ±15%.

Any aspirant for the euro area membership must participate in the mechanism without severe tensions and without devaluing its central rate against the euro for at least two years before it can qualify to adopt the euro. Being part of the Exchange Rate Mechanism is intended to help non-euro-area countries prepare themselves for becoming part of the euro area. It is an important milestone towards adopting the euro.

For more, check out our politics section.

Monday, 20 December 2021

Thirty Years of Croatian National Bank Observed

ZAGREB, 20 Dec 2021 - The Croatian National Bank (HNB) is the central monetary institution that had a crucial stabilizing role in the past and now has an important role on Croatia's path to the euro area, a ceremony marking 30 years of the HNB was told on Monday.

On 25 June 1991, parliament adopted a constitutional decision on Croatia's sovereignty and independence and the following 8 October, a decision severing all ties with the former Yugoslavia. That day, the government adopted a decree on the HNB which went into force on 23 December.

Prime Minister Andrej Plenković said the HNB was the central institution of Croatia's monetary system and that its 30th anniversary was occurring in challenging circumstances due to the pandemic as well as at a time of transformation as Croatia was integrating with the euro area.

He said the HNB had an important stabilizing role in the first decade of Croatia's independence as well as significance which manifested when the global financial crisis broke out in 2008.

Then, with monetary policy measures, the HNB cushioned the effects of the crisis on the economy, preserving exchange rate stability, releasing additional liquidity, and contributing to the state's stability, he added.

Croatia completing euro area preparations as the fourth decade of independence begins

Speaking of Croatia's goal to join the euro area on 1 January 2023, Plenković said the common currency was a logical instrument not just to achieve deeper integration, but primarily to fully exploit the potential of the single market.

With a population of over 340 million, the euro area is the second largest world economy, accounting for 15% of the world's GDP, while the euro is the second most important world currency, accounting for 38% of global transactions, the prime minister said.

Surveys show that 79% of the euro area population support the common currency, while only 15% are against it, although support has gone up during the pandemic, he added.

At the start of the fourth decade of its independence, Croatia is completing preparations for adopting the euro and achieving closer integration with the EU, he said.

"Adopting the euro will be a key step for Croatia towards boosting the economy's competitiveness and bigger economic sovereignty," he said, adding that it is certainly in Croatia's interest to share the same currency with its main trade partners.

Plenković said the decision on Croatia's accession was expected in mid-2022 and that when it joined the euro area six months later, the currency risk and exchange costs would disappear for businesses and citizens, it would have a positive effect on exports and tourist arrivals from the euro area as well as stimulate foreign investment.

He cited the example of Lithuania, which introduced the euro in 2015, saying that since then gross pay has gone up 59% and prices 10%.

In Croatia, between 2015 and 2020, gross pay went up 21% and prices 2.4%.

President wistful about Croatia losing its currency

President Zoran Milanović said that besides the Croatian Army, the HNB was the institution that had done a good job in these 30 years, while all the rest, including courts, the State Attorney's Office,  and all governments, had ups and, unfortunately, more downs.

Regarding euro area accession, the president said he was looking at Croatia's losing its currency with a dose of wistfulness.

He said the decision to adopt the euro was a political one and that it would be good for the economy because of its structure, including the high share of services and tourism.

However, he added, Hungary, the Czech Republic, and Poland have not introduced the euro and, with good arguments and acceptance from their citizens, show tendencies and a clear direction to do things their way.

He said the Czech Republic was borrowing cheaper and more favorably than some euro area member states, wondering how to explain that. Therefore, he added, one should not have absolute views and there should be no dogmas.

The president said Lithuania was the only example of pay rises in the euro area. On the other hand, he added, there are countries where salaries are stagnating or even falling. The Italian economy has been stagnating for 20 years and has never adjusted to the euro, he said.

Speaking of cryptocurrencies, Milanović said everything should be done to control that segment and ban it if necessary. "It's terribly dangerous."

He said abolishing paper money was educationally bad as children must see money to understand its value.

Governor proud of central bank

HNB governor Boris Vujčić said he was proud that they had built such an institution, underlining the real autonomy which the political authorities had given it. Thanks to this autonomy, "we have managed to build an institution which is recognized the world over," he said, adding that the HNB promotes excellence and competence.

Asked by the press if he, too, was wistful about the changes that joining the euro area would bring, Vujčić said he was convinced that it would benefit all citizens, which would prove important in the next crisis.

He said Croatia's accession would be a new challenge for the HNB, which would keep all its functions as the central bank, except decisions on the monetary policy.

As for Milanović's mention of the Czech Republic, Vujčić said it would profit by introducing the euro, but considerably less than Croatia because it is much less euroized.

Asked about cryptocurrencies, he said everyone should be aware of the risks and advised extreme caution "because it's an absolutely speculative type of investment. It's not money that replaces the money issued by central banks."

Finance Minister Zdravko Marić told the press he did not agree with the president's claim that Lithuania was perhaps the only positive example of euro adoption, saying that Slovenia, the Baltic countries, Cyprus and Malta had benefited from it.

Deputy Parliament Speaker Željko Reiner recalled that the kuna was introduced as the national currency on 30 May 1994, replacing the dinar, but said Croatia had aspired to European monetary integration since 1991.

He noted that euro coins will have Croatian motifs, including the marten (kuna) on the €1 coin.

For more on politics, follow TCN's dedicated page.

Thursday, 16 December 2021

Boris Vujcic Reveals When Shops May Start Displaying Prices in Euros

December the 16th, 2021 - Croatian National Bank Governor Boris Vujcic has revealed more about when Croatia will begin displaying prices in shops and other sales outlets in both kuna and euros.

As Poslovni Dnevnik/Ana Blaskovic writes, the latest forecast regarding the domestic economy has been revised once again with Boris Vujcic pointing out that the CNB is "cumulatively quite optimistic". The basic contribution to domestic GDP remains the same as before - foreign demand is primarily made up of the exports of services due to the surprisingly good tourist season this past summer, as well as the growth of the exports of goods and personal consumption.

The burning issue for people, however is the inflation rate, which will accelerate to 2.4 percent this year, and should remain at that level throughout 2022. Boris Vujcic pointed out that Croatia could meet the criteria for joining the Eurozone on time, too.

“The main logistical activity is cash withdrawals and coin minting. We'll have to borrow banknotes and ensure that from the 1st of January 2023 they end up in peoples' hands,'' said Boris Vujcic.

"Everyone is already working on it because we can't wait for next summer to start with that. IT adjustments in companies are already underway, and if we enter from January the 1st, 2023, then we will have to show prices in both kuna and euros as early as the summer months,'' explained Vujcic.

The CNB Council: Croatian GDP growth of 4.1 percent is expected in 2022

At a recent session, the Council of the Croatian National Bank discussed current economic and financial developments and adopted the Monetary Policy Projection and Macroeconomic Developments and Forecasts, as well as several other decisions within its competence. Taking into account the achievements in the first nine months of 2021 and the movement of indicators of monthly economic activity available for the fourth quarter, real GDP could grow by 10.8 percent on the level of the the whole of 2021, and thus already exceed the pre-crisis level this year.

In 2022, growth of 4.1 percent is expected, predominantly supported by foreign demand, with a positive contribution from various other components. The expected slowdown in growth is mostly the result of the base effect, ie the cessation of the effect of the low level of GDP in 2020 on the annual growth rate. The projection of Croatian GDP in 2022 is still exposed to numerous risks, with the negative ones predominating, and they're mainly related to the potential unfavourable development of the ongoing epidemiological situation and the increase in uncertainty that continues to bring with it.

The growth of Croatian tourism revenue during the main part of the summer season this year almost completely brought the current and capital account surplus closer to the record realisation from the third quarter of pre-pandemic 2019, so its level this year could exceed 4 percent of GDP, and additionally increase to 5 percent GDP in 2022. The growth of the current and capital account surplus, along with tourism, is strongly supported by net inflows of EU funds.

Consumer price inflation accelerated, which was influenced by rising food prices, and based on the achievements so far this year, it can be estimated that consumer price inflation at the level of the whole of 2021 could amount to 2.4 percent, with the growth of energy prices accounting for half of this growth. In 2022, the average rate of consumer price inflation is expected to remain at the same level, with inflationary pressures potentially becoming more pronounced in the first half and more subdued in the second half of the year.

For more, check out our dedicated politics section.

Tuesday, 14 December 2021

HNB: Perceived Inflation Rate Exceeds 24%

ZAGREB, 14 Dec 2021 - In the past few months inflation perception has grown strongly and the perceived inflation rate now exceeds 24%, which is much higher than the realized consumer inflation rate of 3.8% in October, the central bank (HNB) has said.

Based on data from a survey on consumer confidence, Lucija Fioretti, Karlo Kotarac, and Davor Kunac of the Croatian National Bank's (HNB) research department have analyzed changes in inflation perceptions in Croatia as well as the reasons for the recent divergence between inflation perceptions and the realized consumer inflation rate.

Since an unusually great divergence between inflation perceptions and the realized inflation rate may signal problems regarding the credibility of and confidence in official price statistics, the authors of the analysis have also compared the retail prices of a number of products published by the Croatian Bureau of Statistics (DZS) with microdata on retail prices in the main retail chains in the country.

The HNB says that the analysis indicates a high level of conformity between individual components of consumer inflation as calculated by the DZS and microdata on the prices of individual products available to the HNB.

The analysis notes that inflation perception, that is, the subjective consumer assessment of price growth is exceptionally important to monetary policymakers because it is closely related to the formation of expectations regarding future inflation, which, ultimately, are an important determinant of the future realized inflation.

In the past few months, inflation perception has grown strongly and now exceeds 24%, which is much higher than the realized inflation rate, which stood at 3.8% in October, the HNB analysts say.

They note that the average perceived inflation has been growing unusually fast in relation to the realized inflation and that one should look at the movement of prices of certain products as the reason for the increased inflation perception.

They note that there is a strong asymmetry in the recent increase in consumer prices, with the prices of some crucial food products such as cooking oil, milk and dairy products, bread, potato and petrol having gone up unusually strongly. All of those products belong in the categories that affect perceived inflation the most.

The analysts stress, however, that despite the strong rise in the prices of some basic consumer basket products, the price increase is not widespread for the time being.

For more, check out our dedicated politics section.

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