Friday, 26 May 2023

Croatian Telecom Companies Raise Their Prices in Line With Inflation

May the 26th, 2023 - As predicted, numerous Croatian telecom companies have begun raising their service prices to be in line with ongoing inflation. They're free to do this one every twelve months going forward.

As Poslovni Dnevnik/Tanja Ivancic writes, given that the telecom companies operating in the Republic of Croatia: Hrvatski Telekom, A1 Hrvatska, Telemach Hrvatska and Iskon, have introduced an index clause in their general terms and conditions of business, they're all going to raise their prices, or should we say ''adjust them to inflation''.

Namely, the change in the way of doing business, for which they also received a positive opinion from the regulator - HAKOM, gave Croatian telecom companies the clear opportunity to adjust their prices once a year to the average annual inflation published by the State Bureau of Statistics (CBS). The CBS also announced that last year the average inflation rate in Croatia stood at 10.8 percent.

As such, Croatian telecom companies now have the possibility to make their users comply with their new rules up to that percentage, although some have set 10 percent as the upper limit. The bad news for telecom subscribers is that after the harmonisation of the general terms and conditions has been done, no one has the option, due to the new prices based on inflation, to terminate their contracts without facing a penalty of some sort. The good news is that Croatian telecom companies can only raise their prices like this once a year, based on whatever the inflation rate is at that time.

So far, as confirmed by HAKOM, based on inflation, only A1 Hrvatska has decided to apply the so-called ''inflation clause'' and as such increase their prices. As announced by A1, as of July the 1st, their prices will be increasing by 8.5 percent for tariffs, packages and options, meaning that their users will receive their first, increased bills in August. Given that Croatian telecom companies all have the obligation to notify their users of new prices thirty days before they come into effect, A1 is starting the process of notifying their users now.

As they have stated, they decided to take this step "Due to several years of unstable market conditions, major challenges in business and a high inflation rate" and further point out that "they will apply an adjustment that is less than the official inflation rate and amounts to 8.5 percent".

The price increase refers to tariffs, packages and options from the official offer, and as they claim from A1, "even after this adjustment, A1's offer remains the most competitive on the market" adding that "the index clause doesn't actually apply to other billed items other than the monthly fee for tariffs, packages and options, such as the consumption of minutes, messages or internet, ICT services, one-off charges and installments for devices and the stated charges remain unchanged. In addition, our users will continue to receive the discounts to which they're entitled in accordance with the previously agreed conditions".

So, let's repeat all of that, users had the right to terminate their contracts without paying a penalty until mid-March 2023, because Croatian telecom companies then changed their terms of business and introduced an index clause. Once that clause has been introduced, users no longer have the right to terminate contracts ''for free'' as it were.

Croatian telecom companies can now, with a built-in index clause, adjust to inflation in the country every year, automatically, once. A1 broke the ice and was the first to do so, so it is to be expected that by the end of the year others will follow their example.

For more, check out our news section.

Thursday, 25 May 2023

Are Croatian Prices Going to Keep Rising? Cheap Food Could be History

May the 25th, 2023 - With inflation still very much a threat to our bank accounts and back pockets, are Croatian prices going to just keep on rising? It seems that the period of cheap food might well be one we don't end up ever returning to.

As Poslovni Dnevnik/Darko Bicak writes, the consequences of the global coronavirus pandemic and the current energy crisis, as well as numerous natural disasters caused by climate change, have led to a drastic increase in Croatian prices for food over more recent years, and the Russian invasion of Ukraine has only pushed it further. The big question is whether food will ever become cheap again, and this topic was discussed at the Green Plan in Croatian Agriculture conference, which was recently held in Zagreb.

The European Union (EU) has provided an enormous 264 billion euros to European farmers, and with various other national funds, this amount will be increased to 307 billion euros in total. How will this all actually reflect on customers who are tired of paying constantly increasing Croatian prices, however?

Marija Vuckovic, Croatia's Minister of Agriculture, confirmed that this country has now almost completely implemented the EU Green Plan in its national regulations, and now their application in practice, among the farmers themselves, is underway. She added that in the wake of numerous ecological European requirements, several additional models of agricultural incentives were introduced through the so-called Environmental schemes that will be generous, but also stricter in terms of achieving any desired goals.

"This regards the sum of 468 million euros payable through the Environmental Schemes over a period of five years, and it's been made clear that these are large funds. So far, we have supported 300 projects for energy projects of renewable energy sources in the field of agriculture, and for the next period, we've foreseen 30 million euros for future projects in agriculture and nutrition,'' said Vuckovic, adding that all other green transition projects within the scope of agriculture are being considered, for which a total of 223 million euros is planned.

Ultimately, the strategic project is the generational renewal of domestic agriculture through the inclusion of young people in this sector because, as the minister pointed out, agriculture will not be sustainable in the long term without the engagement of that demographic. She warned that the policies related to the green transition are all connected because without investments there can be no profitable production, and without that, there can be no sustainable regional development with functional rural communities. In the end, all this will be maintained on biodiversity, but also on the Croatian prices for food themselves.

"Will Croatian prices rise? Many believe that they will. Are the days of cheap food behind us? Well, we can only look at this in the short term, and we can predict for the future to some extent. It's reasonable to expect that floods, or sometimes droughts, will affect the supply and thus the price of food. When we look at the longer term, will the EU Green Plan lead to an increase in prices? This must also be viewed much more broadly. It's a fact that enormous amounts of food are wasted across Europe, and I'm convinced that an economic calculation must be sought precisely in better food management," said Minister Vuckovic. According to European Union statistics, the average household in the EU throws away an astounding 600 euros worth of food per year, while in Croatia it's at the level of 200 to 300 euros.

For more, make sure to check out our news section.

Friday, 28 April 2023

A Week in Croatian Politics - Ukraine, Wages and Popularity Contests

April the 28th, 2023 - This week in Croatian politics, we've had talks about everything from reforms to petrol prices, inflation and wages, to popularity contests and a decreasing number of undecided voters.

Plenkovic talks reforms, Ukrainian soldiers being treated for injuries in Croatia, and more

As Index reports, the latest government session was held yesterday, and Prime Minister Andrej Plenkovic addressed the public at the beginning.

In the introductory part of the session, the Prime Minister referred to current events, recalling the meeting with the Secretary General of the OECD Mathias Cormann, and its overall importance. He also singled out his recent visit to Osijek, where a large economic centre was opened, representing an investment of 10 million euros. 

"Yesterday, those from Ukraine who have been wounded arrived in Croatia, they've all been being taken care of, and I'd like to wish them a steady recovery," he said.

"A government meeting was held and as a result, petrol and diesel became cheaper. Without government measures, fuel would be twenty cents per litre more expensive," he added.

"We've now adoptedthe national reform programme. We have 56 permanent measures, and some more measures have been added in various areas for good measure. The adoption of the stability programme document is particularly important. The main backbone of economic policy in the coming period will be the responsible management of public finances. We've gained credibility. The goal is to increase the growth of the economy, to be on the trail of two major directions - climate policy and digital transformation," he said, and when discussing the country's fiscal policy, he added that he would concentrate on reducing the public debt.

"Our projections for the medium-term period are realistic. Last year we achieved growth of 6.3 percent and provided numerous aid packages to members of the public. We gave more than 6 billion euros in aid to the public and the economy. Due to excess income at the local community level, we achieved a budget surplus of 4 percent of GDP - and we reduced public debt last year as well," he added.

"Croatia is the only country that has had its credit rating raised by all three agencies since the beginning of the Russian invasion of Ukraine. The next period will be marked by uncertainty, but we can realistically expect the Croatian economy to grow by 2.2 percent this year. We can predict this based on the excellent results in tourism so far and this will be a record year. As for the stability pact, we've met all the criteria. As for inflation, we expect a slowdown to 6.6 percent, and in the coming years we expect a significant slowdown to previous levels."

Inflation and wage increases (or a lack of) were discussed on Otvoreno by politicians from across the spectrum, and the CNB's deputy governor, Sandra Svaljek

When will price growth in Croatia stop? Is inflation imported or is it the result of domestic issues? Why does the CNB governor claim that salaries in Croatia today are growing faster than inflation is rising? Whose wages are rising and by how much, and who is on the verge of poverty? How can protect the standards the public is used to? All of the above was discussed on a recent episode of HRT's Otvoreno (Open). The present guests were Sandra Bencic (Mozemo!/We Can!), Marko Pavic (HDZ), Branko Grcic (SDP) and the deputy governor of the Croatian National Bank (CNB) Sandra Svaljek.

Bencic: Salaries are now lower in real terms than they have been back during previous years

Sandra Bencic (Mozemo) said that recently in the Croatian Parliament, they criticised CNB Governor Boris Vujcic for the lack of timely information from the CNB last autumn.

"Recently, at an international gathering, the governor presented data that clearly proved that a significant part of the inflation we have here in Croatia is driven by the growth of margins, and that the growth of margins in that share of total inflation has 5.1 points, while wage growth stands at 1.5. This shows that the margins have grown a lot more quickly and contributed much more to overall inflation than wage growth has."

"On the contrary, we know that the growth of wages didn't follow inflation and that they fell in real terms back in 2022. This means that if the amount increased nominally, you could buy less than you could before. Even today, wages are lower in real terms than they were in previous years,'' she added.

"What we asked at the press conference is that if margins drive inflation the most in Croatia and if the fact is that more than 8% of the 12% inflation we had is domestic inflation, not imported inflation, then the measures to suppress inflation must be different. In such a case, the issue of tax on extra profits cannot be limited to the profits made in 2022, but now we have to make changes to the law on extra profit to signal to those who will make that extra profit that they will be taxed on it. But that can't be implemented across all sectors equally as it was back in 2022, but instead it should be implemented on those sectors that increased their margins the most, and thus contributed the most to inflation, and it seems that these are the trade and accommodation sectors," Bencic pointed out.

Pavic: Croatia has avoided a technical recession and we expect a clear economic momentum

Marko Pavic (HDZ) said that while appearing on Otvoreno, they had the opportunity, among other things, to discuss the governor's report in parliament, as well as the results of the government's policy in curbing inflation.

"What should definitely be pointed out is that the government has introduced four packages so far, the last of which is worth 1.7 billion euros. The goal was to reduce energy prices, I'd like to remind you that we have electricity and gas prices 2 to 3 times cheaper than the market price, to protect people from inflation and to prevent a social fracture for those who are the most vulnerable, primarily pensioners, unemployed people, young people and children, all of whom are vulnerable groups in our society," Pavic said.

"This has led to good results, inflation has been slowing down over the last four months and according to the data of the National Bureau of Statistics, the average salary has exceeded to 1,106 euros. Over the last 6 years, accumulated inflation has stood at 16.4%, of which 10.1% was last year, but salaries have grown by 30%, pensions by 28%, and the minimum wage by almost 70%. Croatia has avoided a technical recession and we expect a clear economic momentum," Pavic pointed out.

"As for the law on extra profit, we passed it precisely because of price manipulations. It brought several hundred million euros back into the state budget," he added.

Grcic: Employees are being neglected in terms of the distribution of higher GDP

Branko Grcic (SDP) said that he would refer back to the data that Pavic is talking about, which is full of illogicality.

"Here in this study, six months ago I warned people, about a radical change in distribution in Croatia. This has now been shown by the data and analysts from other countries in our environment. You have a situation where your GDP grew by over 6% in real terms last year. At the same time, you have a real decline in terms of salaries, and we don't agree with that. The data clearly shows that the employees themselves were neglected in that distribution and that the higher GDP that was actually achieved went somewhere else.

That's what I said 6 months ago here, when not many people were talking about it. In fact, there's nowhere to go but to the two sources that make up the GDP structure. These are government revenues (taxes and contributions) and profit. It's clear that if the state has roughly followed the GDP, those who create profits have profited. "Profit is not the shameful thing, the shameful thing is that some people in Croatia simply cannot live on their incomes, whether they're salaries or pensions," said Grcic.

"The data for the six years that Pavic is talking about is very clear. From the government's presentation, which was released to the public a few weeks ago, it's clear that GDP has grown by 25% in real terms over the last six years, while wages have only increased by 15% and pensions by only 6.7%. I'm talking about reliable data from the government's presentation. So you're actually mixing nominal categories with real categories," Grcic emphasised.

"That's the key problem facing Croatia. It has so happened that many people have used inflation to pump their own profits. If that profit will go into investments tomorrow, that's good. If that profit will be repatriated, if it will leave Croatia, if it will be enjoyed some foreign owner who has a company in Croatia, and not by the Croatian people, then this is a problem.'' Grcic concluded.

The latest Crobarometer survey reveals that HDZ is still the favourite party, and that President Zoran Milanovic (SDP) is seen in the most positive light

As Index reports, the Crobarometer monthly survey for April by Dnevnik Nova TV has now been published. The research results reflect the period of the end of the previous month and the first half of the current month.

The Crobarometer results for April shows that inflation, i.e. the rise in the prices of certain products and services, remains an important topic in the public space and in the everyday life of the general public. In addition, healthcare remains in sharp focus. The justice sector was also partly in the public's focus with the announcement of changes in how it functions. With Easter and the first major arrival of tourists out of the way, topics related to tourism have now, in their seasonal pattern, become reborn. Optimism increased slightly in April and is at a similar level as it was back at the end of last year and in January this year.

HDZ still has over 30 percent of public support as a party

The survey shows that HDZ has firmly consolidated its support and it hasn't fallen below thirty percent. It remained very much the same throughout the month of April, and it currently enjoys 30.9 percent support. That said, seems that the SDP is also somewhat cautiously recovering. SDP's level public support stands at at 13.6 percent, 1.5 percentage points more than last month, and, what is even more important for that party, is that their rating has been slowly growing for the third month in a row now.

In third place is the Mozemo! (We Can!) party with 8.8 percent, with a similar growth and trend as SDP. The fourth is Most (Bridge) with 8.7 percent support, also recording a positive trend, while in fifth place sits Domovinski pokret (Homeland Movement) with a slightly negative trend and a mere 6 percent support.

The parties that haven't even crossed the electoral threshold and enjoy more than 1 percent of support are IDS, Centar, Blok imirovljeni zažene, HNS and HSU. All the others, including parliamentary parties such as the Social Democrats, HSLS or Sovereignists, have less than 1 percent of recorded public support.

There's been a visible decline in the number of undecided voters

The secret of the growth of the aforementioned parties, it seems, is the decline in the number of undecided voters. Although they're still the second political force in the country, that number is decreasing and now 17 percent of respondents who would certainly or probably go to the polls don't know who they'd choose to vote for. Just one month earlier, that number stood at a concerning 19.2 percent.

It also seems that the parties of the left and centre left, SDP and Mozemo, grabbed the most people from that pool over the last month, which indicates the only way in which one can try to counter HDZ is to consolidate their base and seek space among the undecided.

As for how many people would go to the polls if they were held today, judging by the respondents, the turnout would be decent: 68 percent of them would definitely or very likely go to the polls to vote. 27 percent of them would certainly or probably boycott the elections, while five percent of those surveyed had no opinion on it whatsoever.

Which politicians are the most popular?

The public perceives President Zoran Milanovic in the most positive light, despite his bizarre ''politically damaging'' statements and somewhat odd behaviour at times. In second place this month is Zagreb Mayor Tomislav Tomasevic, followed by Bozo Petrov, in fourth place is Ivan Penava and in fifth is Prime Minister Andrej Plenkovic.

Unsurprisingly, the public has the most negative impression of Milorad Pupovac, followed by Gordan Jandrokovic and Zlatko Hasanbegovic in joint second place, and Prime Minister Plenkovic and Hrvoje Zekanovic tied for third place. If you look at the net ratio of negative to positive experiences, Tomislav Tomasevic is the best, second place is shared by Bozo Petrov and Ivica Puljak, fourth is Ivan Penava, and fifth is President Milanovic.

Support for both President Milanovic (SDP) and Plenkovic's government (HDZ) is growing

After his support fell for four months in a row, Milanovic has successfully managed to reverse that trend. Namely, 56 percent of respondents who don't support his work decreased to 53 percent, while the number of those who support him increased from 36 to 38 percent.

There has also been a change in the trend regarding support for the work of the government itself. After a slight but constant three-month increase in the number of respondents who claimed not to support the moves made by the government, there's also been a change. The number of such people decreased from 65 down to 61 percent, while the number of those who support the work of the government increased from 28 to 30 percent.

Labour Minister Marin Piletic was a guest of Romano Bolkovic's popular 1 on 1 (jedan na jedan) show, where he claimed that the Croatian labour market is becoming more and more interesting

Labour Minister Marin Piletic was a recent guest of Roman Bolkovic's show "1 on 1" on HRT, where he spike about the dynamics of unemployment and employment across the country. Minister Marin Piletic also presented the data he had on the number of residence and work permits issued to foreign workers.

"With regard to the legal changes from 2021, in 2022 we had a record number of foreign workers in Croatia, more than 124,000 of them received a permit to stay and work here legally," he said, adding that it's still the case that the most foreign workers in Croatia mostly come from Bosnia and Herzegovina, Serbia, Macedonia and Nepal.

According to Piletic, the fact that Croatia has reached the figure of 124,000 foreign workers in Croatia from the quota system is in favour of the fact that Croatia is becoming an interesting labour market.

''We're aware of all the challenges we're dealing with, with the number of people who have temporarily or permanently left the country following liberalisation and the opening of the EU's doors to Croatia, and based on the demands of employers, but also the real needs of the labour market, it was possible for 124,000 foreign workers to find happiness in Croatia. In 2023, we've had more than 40,000 requests for the issuance of permits for residence and work in Croatia,'' he stated when discussing the current data.

When asked how Croatia might work harder to try and retain the best quality people, in whom the most was invested through education, Piletic answered: "Only with an adequate price offered to them for their work. Since 2016, the average salary in Croatia has been growing rapidly," pointed out Piletic.

Negotiations with trade unions

''The average net salary in Croatia is now 1,106 euros, but the government is continuing to do everything it can to make the price of labour higher. Among other things, we reopened collective negotiations with representative unions,'' said the minister, noting that last year, the base increased twice and that on April the 1st of this year, in accordance with the agreement and the collective agreement, the base rate increased by two percent. He added that negotiations will continue after the summer tourist season is over, when the possibility will open again that the price of labour, through the increase of the base, will be higher.


For more on Croatian politics, make sure to keep up with our dedicated section. A dedicated Week in Croatian Politics article is also published every Friday.

Monday, 24 April 2023

Croatian Inflation Sees Less Spent on Investment But Fiscal Picture Improves

April the 24th, 2023 - Croatian inflation has seen certain investments shelved, with 6.8 percent less being spent on investments across the board, but aside from that, a better fiscal picture than previously expected has emerged.

As Poslovni Dnevnik/Jadranka Dozan writes, like most other member states of the European Union and the Eurozone, Croatia ended 2022 with a better general government budget balance and a further decline in the level of national debt measured as a share of gross domestic product. The improvement of the Croatian fiscal picture was manifested in the realised surplus of 0.4% of GDP instead of the deficit recorded the year before (which was also planned for 2022).

The dynamics of the debt-to-GDP ratio, which was reduced by as much as 10 percentage points, down to 68.4 percent, proved to be better than expected, according to the first of two reports on the budget deficit and national debt that the national statistical offices submit to Eurostat during the fiscal year, under the supervision of the European Commission.

High levels of Croatian inflation contributed to the aforementioned outcome, and in addition to enterprises who were forced in most cases to increase their profit margins, inflation also "benefited" the state in certain ways, on the one hand by filling the state budget, and on the other by "devaluing" state debts in relation to nominal GDP.

The surplus of the consolidated general government reached almost 2 billion kuna last year, while a deficit of almost 11 billion kuna or 2.5 percent of GDP was recorded the year before that. The last time the state had a fiscal surplus was otherwise back during the pre-pandemic, record tourism year of 2019.

Bearing in mind the relatively generous fiscal incentives that last year were primarily motivated by the Russian aggression against Ukraine and its consequences on supply chains and price pressures, in such conditions (taking into account the beneficial effect of inflation on tax revenues such as those from VAT) the realised surplus could could indicate that Croatia's fiscal policy was actually relatively restrictive.

The Central Bureau of Statistics (CBS) pointed out that the favourable balance of the state budget itself, which stood at as high as 11.6 billion kuna, had a big impact on the amount of last year's surplus. Taxes on production and imports were collected, they say, in the amount of 94.44 billion kuna (according to the time adjustment method) which represents a 13.6 percent increase compared to the year before, current taxes on income and wealth were collected in the amount of 37.4 percent more, and net social contributions poured in 12.8 percent more than they did back in 2021.

On the expenditure side, fiscal incentives were manifested through increased expenditures for subsidies. Last year, interest expenses reached a staggering 7 billion kuna, or about 250 million (3.5%) more than the year before. However, in the context of the achieved surplus, it should be noted that last year, there was a noticeable decrease in general government expenditures for investments, by 6.8 percent, to slightly more than 19.1 billion kuna, and some analysts believe that this speaks volumes about the weak investment activities of the City of Zagreb.

From the aspect of state finances and debt, it is certainly important that two tranches of EU grants for the National Recovery and Resilience Plan "settled" things a little bit more last year.

Croatian inflation might be what is making all of our wallets feel a little slimmer, but issues like this are very much in evidence across the EU, and when compared to the peak in 2020, marked by a sharp economic decline, in just two years, Croatia's debt ratio dropped by as much as 18.6 percentage points of GDP.

Among the EU member states, Greece (-23.3 points), Cyprus (-14.7), Portugal (-11.5) and Ireland (-10.7) also reduced their respective debt levels by more than 10 percentage points last year. However, while in the case of Ireland it fell below 45 percent of GDP, in Greece and Portugal, even with such reductions, their debt remains higher than their GDP (Greece is at 171 percent, and Portugal is 114 percent).

In relation to the countries of Central and Eastern Europe with which Croatia and the situation of ongoing Croatian inflation are usually compared, the level of the national debt of Croatia is still generally higher. For example, Slovakia's stands at 57.8 percent, Poland, Romania and the Czech Republic are all below 50, and Bulgaria at only 23 percent. In neighbouring Slovenia and Hungary, which still had lower level of debts, it is now slightly higher (standing at 70 and 73 percent respectively).

The lowest ratio of national debt to GDP was recorded in Estonia (18.4%), and it is below 40 percent of GDP in five other countries, including two from the "upper house" according to the level of development (these are Denmark and Sweden). Thirteen other EU member states exceed the "Maastricht" limit of 60% of GDP, and in six nations, the debt exceeds GDP, among which are some of the largest EU economies, such as Italy, France and Spain.

For more, make sure to check out our news section.

Thursday, 6 April 2023

Ministry of Economy: Prices in Croatia Have Remained Stable

April 6, 2023 - A total of 755 prices remained unchanged compared to December 31, 2022. Prices in Croatia have been recorded as stable after March 31, the Ministry of Economy and Sustainable Development claimed on Tuesday, referring to data from their website Kretanje cijena.

"After the last entry of data with prices from March 31, it is still visible on the website that prices in the largest retail chains in the Republic of Croatia are stable," the ministry said in a statement, as reported by Poslovni.

At the same time, it is stated that of the total number of prices for products monitored on the website, 253 were reduced compared to December 31 last year, of which 157 were reduced due to promotions.

"Noticeable price reduction is visible in Persil laundry detergent in Konzum and KTC and Lay's chips in Konzum. Among local producers, laundry and dishwashing detergents Faks and Likvi and Podravka jams and pasta have become cheaper," says the press release.

The latest update on the site on March 31 also shows 71 price increases compared to December 31, 2022. The price increases are said to be mainly for seasonal fruits and vegetables, Nivea shower gels, Barilla pasta, and Elseve shampoos.

On February 17, the Ministry of Economy and Sustainable Development put into operation the application solution Kretanje Cijena with the primary goal of providing citizens with an overview of price movements in retail chains in one place and a comparison with prices as of December 31, 2022, for targeted product categories that are part of the standard consumer basket.

The partners of the "white list" project since its inception have been the shopping chains Konzum, KTC, and Tommy. For those retail chains, the consumer basket values for the observed products as of December 31, 2022, are shown on the website.

As of March 24, the Ministry of Economy and Sustainable Development completed the website with new prices of the other seven major retail chains for the 365 items tracked on the site.

Since the launch of the website until April 3, it has recorded more than 730,000 views, according to the ministry.

For more, make sure to check out our dedicated News section.

Monday, 3 April 2023

Despite Inflation Slowdown, More Croatian Price Hikes On The Cards

April the 3rd, 2023 - Despite the slowing down of inflation across the country for the fourth consecutive month now, more Croatian price hikes appear to be on the horizon.

As Poslovni Dnevnik writes, after a long time of everything seeming to cost the earth, it has finally been confirmed (at least according to the first estimate of the CBS for March), that inflation is continuing to slow down. That said, the prices of goods and services for personal consumption, measured by the consumer price index, are 10.6% higher on average on an annual basis, and 0.8% higher now than they were back in February.

However, compared to last March, food, drink and tobacco are still the most expensive items - they are 15% more expensive on an annual basis, and although the government and ministers still claim that there is no justification for most of the Croatian price hikes we've been seeing for some time now, some in the trade sector still listed more new prices recently, and these include the manufacturers and suppliers of detergents, cosmetics, pasta, chocolate, and so on.

Some prices have been in effect since March, writes Vecernji list, but some are still waiting for their old stocks to be used up/sold first, as was explained by the leaders of the HGK and HUP merchants' associations, Ivica Katavic and Martin Evacic, as well as the KTC and NTL retail chains.

Katavic claims that foreign companies were the strongest of all in announcing price increases, but there are Croatian companies very much engaging in the same as well. This new wave of Croatian price hikes mostly regards increases of around 8 to 10%, but there are also those of 25 to 30 percent. Evacic added that the rise or fall of prices also depends on the sources of supply of the retailers themselves, contracts, agreements, terms... and the public.

Branko Roglic, the owner of the well known Croatian Orbico Group, otherwise the largest distribution company in the country's immediate region, says that they've raised their prices for their customers only by as much as their suppliers raised them for them.

''We will not increase our margins, but only transfer the prices we receive from our suppliers to our customers. We've been doing this for more than a year and a half, since the prices started to rise. We don't have any special earnings from this, nor do we want such earnings,'' he said.

For more, check out our dedicated news section.

Tuesday, 14 March 2023

With Prices Rising, Do We Need to Worry About Croatian 2023 Tourist Season?

March the 14th, 2023 - Do we need to be worrying about the Croatian 2023 tourist season this summer as prices continue to rise? With even the faithful Germans saying that Croatia is becoming too expensive, there's room for improvement.

As Poslovni Dnevnik writes, there are currently around three and a half thousand guests staying in the wider Kvarner area, which is a very good number for this time of year. The announcements are good for spring and summer across nearby Istria as well.

However, there are more and more warnings that we have to change the trends within the Croatian tourism sector. Overcrowding is an issue nobody enjoys and which is increasing, the real estate business is booming, and the prices of both accommodation and services are rising. And it won't stop there...

Winter is coming to an end and this country's most faithful guests of all, the Germans and Austrians, are busy warming up after the cold. Owing to that, gorgeous little Opatija, a favourite of both the Germans and the Austrians, is never empty.

"We're happy that in just the first two months of this year we achieved even 40 percent more overnight stays than we did back during the record year of pre-pandemic 2019. But that's a trend where, for a decade or so now, we've been see an increase in the number of arrivals outside of the main summer season from year to year," stated Irena Persic Zivadinov, the director of the Kvarner Tourist Board.

Kvarner's many hotels have prepared various arrangements and packages aimed at attracting guests for the Croatian 2023 tourist season, but they're now more expensive, writes N1.

"Considering the input costs, of course the situation is very uncertain for the entire market. We're really trying to be flexible here, but we're also working in accordance with the rate of inflation on the entire price policy. In accordance with the rate of inflation, there will probably be an increase in prices, but again, we're doing our best to be fair,'' Ivan Sarajlic, the spokesman of a hotel group, stated.

Impressions from the largest tourist exchange which was recently held in the German capital city of Berlin are still settling in. The Germans traditionally love Croatia and have been among the country's most faithful and most frequent visitors of all for many years, but even they are raising their eyebrows at some of the prices nowadays.

"Now some other countries in Croatia's immediate neighbourhood are already seriously competing with us, such as Montenegro, which is fighting for Western tourists after losing Russian and Ukrainian tourists, and there is also Albania with its beautiful coast, which is very competitive both in terms of quality and values. The Germans are saying Croatia has become too expensive,'' warned tourist consultant Nedo Pinezic.

Both expensive and overcrowded, warned Istria County's prefect, as the Croatian 2023 tourist season rapidly approaches.

"I think that, when we talk about quantity, we've reached that certain maximum. Istria has 468,000 registered beds. If 200,000 of us live there and take into account the number of unregistered facilities among that, the question is to what number we can go? Has Istria exceeded its limit in this sense? I think it has,'' said Boris Miletic.

For more, make sure to check out our dedicated news section.

Wednesday, 8 March 2023

European Central Bank: Intro of Euro in Croatia Only Mildly Affected Prices

March 8, 2023 - The introduction of the euro in Croatia only affected the prices in January and February relatively mildly, by 0.4 percentage points. This is similar to the experiences of other countries that introduced the euro, shows the Preliminary analysis of the European Central Bank (ECB) and the Croatian National Bank (CNB).

As Index writes, the analysis was published in a blog post titled Has the Euro Changeover Caused Extra Inflation in Croatia?

The blog authors Matteo Falagiarda, Christine Gartner, Ivan Muzic, and Andreja Pufnik found that the January increase rates of the price of goods were in accordance with historical patterns in the past ten years. In contrast, service prices have on average, increased more than in the past years in January 2023. In February, however, none of the components of inflation deviated significantly from the historical average, the CNB reported today.

"65 percent of prices remained unchanged"

The authors point out that the official increase rate of the Harmonized Consumer Price Index in January compared to the previous month was only 0.3 percent. In February, it was 0.2 percent compared to January, classifying Croatia among the countries with the lowest monthly price increase rate in the Eurozone.

From the analysis of microdata on retail prices, it has been observed that the proportion of attractive prices (such as "0.99") decreased significantly, with about 98 percent in kuna to about 45 percent in euros, as a direct reflection of the fact that in January, prices have not changed much, so expressed in euros they were no longer at attractive levels (e.g. "0.99").

Specifically, as many as 65 percent of prices remained unchanged in January compared to December, and out of the remaining 35 percent - 25 percent of prices was reduced, as some retailers rounded off prices at lower levels when remodeling from kuna to euros, they say in the CNB.

The perception of inflation lowered after the introduction of the euro

The impact of introducing the euro on the perception of inflation and inflation expectations was also analysed. Contrary to the previous experiences of members of the eurozone, where the perception of inflation increased the most during the introduction of the euro, in Croatia, this perception decreased in January compared to December and remained stable in February, while inflation expectations have significantly reduced in both months.

The reduction of the perceived inflation was most influenced by the decrease in energy prices, which outweighed the possible negative effect of the introduction of the euro on the perception of inflation, they say in the Central Bank.

The authors conclude that despite the more challenging inflationary environment, the impact of the introduction of the euro on consumer prices in Croatia has so far been relatively gentle and in accordance with the experiences of other countries that have already introduced the euro as an official currency.

For more, make sure to check out our dedicated News section.

Friday, 17 February 2023

Wholesale Costs Higher as Croatian Food Prices Continue to Cause Issues

February the 17th, 2023 - Croatian food prices have been causing issues for some time now, partly due to inflation and partly due to the introduction of the euro as the country's official currency on the first day of 2023. There have been a lot of ups and downs, and wholesale prices have increased quite significantly indeed.

As Poslovni Dnevnik writes, when compared to back in January 2022, the prices of bananas, tomatoes, onions, carrots and potatoes rose the most across the country, and over the last two years, the highest price growth was for potatoes and onions. Wholesale prices grew considerably in comparison to January 2021, with potato prices shooting up by 120 percent and onion prices by 77 percent, said Agriculture Minister Marija Vuckovic.

When it comes to grains and oilseeds, compared to the end of 2022, there's either been price stagnation or a slight decline in the most important grains in wholesale - wheat by nine percent, and corn by 15.5 percent. Compared to the year before (January 2022/January 2023), the prices of wheat are higher by 11.11 percent and corn by 12 percent, while the prices of soybeans are now lower by 4.76 percent.

The wholesale prices of flour in the fifth week of 2023 have been higher compared to what they were back at end of 2022, and for smooth (finely ground) flour by 1.89 percent, and for hard flour by 14.75 percent.

''During January and the beginning of February 2023, the purchase prices of pork and beef did not differ significantly from what they were back at the end of 2022,'' Vuckovic said, adding that ''in the fifth week of this year, the wholesale price of beef was higher by 15.09 percent when compared to one year before, and approximately the same compared to the end of 2022, while the purchase price of pork has been 50.36 percent higher on an annual basis.''

If the wholesale prices in the fifth week of this year are compared with the EU average, it can be said that the wholesale price of beef is lower by 4.31 percent, while that of pork is almost identical. The prices of lamb are slightly higher, while the prices of chicken are decreasing and according to the EU average, they're now lower by 1.15 percent in the fifth week of this year.

The highest growth when it comes to Croatian food prices, as Vuckovic said, has been recorded in the wholesale price of eggs and those prices have been altering continuously since back in March/April 2022 and are currently at record high levels.

In the fifth week of this year, the wholesale price of A-class eggs is lower by 1.05 percent compared to the last week of 2022, and significantly higher compared to the year before, she said, noting that Croatian wholesale egg prices are otherwise higher than the EU average.

For more on Croatian food prices and inflation, make sure to check out our dedicated news section.

Saturday, 11 February 2023

Inflation in Croatia: Prices in Shops Wild, Government Provides an "App"

February 11, 2023 - Inflation in Croatia is becoming increasingly apparent, with the prices in shops reaching new highs almost weekly. So the Croatian government invented yet another app. The ministry of economy and sustainable development presented the "application," which is really a website where, as they announced, Croatian citizens will soon be able to follow in detail the movement of product prices in retail chains.

As Index writes, Minister Davor Filipović presented more details about the application itself, the effect of white lists, and the movement of energy prices in Nova TV's Dnevnik.

"The application has been fully developed and is now in the test phase. Today we showed it to trade unions and journalists, and I believe that in the coming days, it will be available to all our citizens, and it will help them make informed decisions about purchases, '', said Minister of Economy and Sustainable Development Davor Filipović.

Retail chains that did not provide data: "If you have nothing to hide, you will provide information"

"It is possible that because of this, because it would be clear how the prices moved, some of the retail chains did not want to provide their information," said the minister.

"If you have nothing to hide, you will provide all the information requested. We are not looking for this information for ourselves; we are requesting it for the sake of our citizens so that they can see how the prices moved and who has been fair to them, and then, of course, they could weigh it out when they go shopping'', the minister said.

Filipović pointed out that the goal was for citizens to see how prices in retail chains move transparently, and reiterated that they asked retailers to provide them with prices going back a year so that the Ministry could make a detailed analysis of what happened to prices, to which only three chains agreed - Konzum, Tommy, and KTC.

Filipović says that in the future, prices will be collected from the other chains via price listers in stores.

Fuel becoming cheaper

Regarding fuel price, Filipović said there is enough stock in Europe, announcing that next week, on Tuesday, there will be a significant reduction in the price of diesel by almost one kuna and a reduction in the price of petrol.

For more, make sure to check out our dedicated News section.

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