Rising Prices in Croatia: Is the Euro Really the Main Culprit?

World » SOUTHEAST EUROPE | January 30, 2025, Thursday // 16:01
Bulgaria: Rising Prices in Croatia: Is the Euro Really the Main Culprit?

A large-scale boycott of supermarket chains took place in Croatia on January 24, 2025, in protest against rising prices, particularly in the retail and food sectors. Another boycott is planned for January 31. The reasons behind the price increases, however, are far more complex than a single factor like the eurozone, despite what some social media commentators may claim.

Inflation in Croatia, much like in other Western countries, surged in the latter half of 2022. Businesses took advantage of this and rounded prices up when the country adopted the euro on January 1, 2023. However, inflation gradually declined over the next two years, precisely when the most significant effects of the currency change should have been visible. Toward the end of 2024 and the beginning of 2025, inflation started rising again, prompting Zagreb to introduce price caps on certain goods—a move that often leads to unintended consequences. In this case, prices of unaffected products increased, as pointed out by "Halo, Inspektore," one of the main organizers of the boycott.

Similar boycotts are occurring in neighboring countries like Bosnia and Herzegovina, Montenegro, and North Macedonia—nations that are not only outside the eurozone but have no immediate prospects of joining the EU. Meanwhile, other eurozone members are not experiencing the same level of unrest. This suggests that the issue is more regional than currency-related, rooted in the economic dynamics of the Balkans rather than the eurozone itself.

Croatia's economy relies heavily on food imports, making it more vulnerable to external price shocks. Meat products and dairy alone account for 35% of the country’s trade deficit. As living standards improve, especially among younger generations, there is a growing demand for imported and exotic foods, further increasing reliance on foreign suppliers. Additionally, Croatia’s tourism sector, which contributes over 20% of GDP, plays a role in price setting. Many businesses in the retail and food industries adjust their prices to match tourist demand, which raises costs for locals—an issue that predates the adoption of the euro.

Despite the recent protests, there is no significant opposition to the eurozone or the European Union among Croatians. According to a Eurobarometer survey from October 2024, nearly 70% of respondents believe Croatia has benefited from EU membership. Furthermore, 56% have a positive view of the bloc, compared to just 10% with a negative opinion.

Yet, some will continue to insist on simplistic explanations. While social media experts may be eager to link Croatia’s economic challenges to the eurozone, the reality is far more nuanced.

Sources:

https://tradingeconomics.com/croatia/inflation-cpi 

https://www.facebook.com/halo.inspektore 

https://data.europa.eu/data/datasets/s3292_101_5_eb046ep_eng?locale=hr 

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Tags: Croatia, euro, prices

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