The latest statistics from the Tax Administration on fiscalization, for last month and the first half of this year, testify to a change in the trend in the leadership over inflation. As a rule, the service sector has been driving the overall inflationary process, and now trade is coming to the fore, in which a large share of the price is held by manufacturers of retail goods. First and foremost, these are farmers and the food processing industry. But before we once again call greedy merchants responsible for the continuation of long-term inflation, let's take a closer look at the key relationships in this story.
Yes, in the first 15 days of this month, the increase in the average bill in shops was slightly more than ten percent, compared to the same period last year. For the same period, restaurants and cafes, as well as hotels and apartment rental companies, recorded an increase in the average bill of 7,5 percent. However, even a quick look and a longer previous period reveals that retailers had less of an impact on overall inflation than the tourism sector.
Last year, the largest price increase, at 8,5 percent, was achieved in the restaurants and hotels category, while food and beverages rose by 5,8 percent. Similar trends were observed the year before, which means that the tourism sector has imposed an excessively high inflationary pace on the overall domestic economy for a very long time. However, we are not emphasizing the difference between the sectors here because of shared personal preferences, but rather to draw attention to their correlation, which, when disrupted, itself becomes a hotbed of inflation.
The importance of their interaction becomes apparent precisely because, in the end, as the circle closes, the productive and non-productive sectors drag each other into a vortex of price increases. Croatia is being hit hard by the full effect of the shock of shutting down a large part of material production and the sudden push for services, i.e. tourism. The contexts in which these two sides function, as well as certain of their characteristics, are very different.
Services have a significantly lower profit margin, they are oriented towards the external consumer market, and most often also towards imports, e.g. food. Domestic farmers, on the other hand, have already been beaten down by the harmful policy towards the domestic currency, subordinated to the mark and the euro for three decades. If we add to this the desperate agricultural policy, and finally the inflationary pressure of the service sector, it is a real surprise that there is still any domestic food production at all, let alone that its price is steadily rising.
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