TRIESTE – Croatia will no longer be a low-cost holiday destination. The introduction of the euro in the last European Union country to join the Eurozone confirms that the single currency represents a real bargain for traders, who – with the excuse of rounding off – double the prices of consumer goods unjustifiably compared to the real conversion rate. On the contrary, for consumers, it represents a real drain. A story already seen in Italy too. For the government led by Andrej Plenkovic it is about a real “scam”while facing a complex situation on the inflation front.
The conversion rate was set at 7.53450 Croatian kuna per euro with the decision of the Economic and Financial Affairs Council of 12 July 2022, but “some of the actors behave fraudulently, raising prices and harming their own citizens and the ‘economy’, attacked the Croatian prime minister. A price increase within the sphere of rounding “would be foreseeable and not a big problem if it were a few cents”, Plenkovic pointed out, but “it is not the same thing if it is 10, 20, 30, 40 or 50% in more”.
Before and after the Euro: the comparison
A comparison before and after January 1, 2023 is enough to understand the level of price increases. In a city like Rijeka (Rijeka) or Zagreb the average price of a cup of coffee it went from 1.73 euro (13 kuna) to 2 euro (15 kuna), for a 16% increase. In Osijek, the fourth largest city in Croatia, the same good before the changeover to the new currency cost 1.06 euros (8 kuna) and in 2023 it went down to 1.2 euros (9 kuna, +13%) or even 1.5 euros (11 kunas, +41%). The same can be said about consumer goods such as bread, wheat, milk and meat, after the publication of the results of the investigations conducted by the State Inspectorate: in bakeries a increase in the prices of bread and bakery products between 15% and 30%for goods such as chicken and turkey meat, water and eggs on average by 13%, while i food services grew up to 43%..
In addition to the imposition of sanctions for unfair commercial practices and for tort – which can reach 26 thousand euros – the government is discussing the possibility of introducing a “blacklist” of resellers and traders, which “makes public the names of those who work to the detriment of our citizens, thus fueling inflation”. This is precisely one of the major concerns for Zagreb, especially considering the data for November 2022. If in the Eurozone the rate of inflation decreased by half a point – falling from 10.6% to 10.1% – the exact opposite happened for Croatia, with further growth to 13.5% (+0.3 compared to the previous month). Two percentage points more than in Italy, with upward pressure exerted above all by the prices of food products and soft drinks (19.2%), restaurants and hotels (17%), accommodation and utilities (16.5% ) and transport (13.3%).CopyAMP code
It was there that tried to throw water on the fire European Central Bank (ECB), which in its latest bulletin included a specific chapter on the economic situation in the country which “is expected to benefit from the adoption of the euro”. One of the advantages is precisely linked to the lower financing costs for the economy, “thanks to well-anchored inflation expectations and the reduction of regulatory costs and currency risk”. Given the “already high level of economic and financial integration” of Zagreb in the Eurozone “and the previous stability” of the exchange rate, “the cost of losing the ability to adjust the exchange rate as a macroeconomic policy tool in the event of a shock asymmetric will probably be low», concludes the ECB.