The Croatian government and businesses are at loggerheads as traders reject measures aimed at countering price increases following the introduction of the euro and claim that inflation is the reason for the price hike.
Prices jumped as soon as Croatia replaced the kuna with the euro on January 1, as traders rounded up prices in the new currency.
As a result, the government took measures against traders on January 5, warning them that they will impose fines, cancel energy subsidies or increase taxes if they do not return prices to the level before the introduction of the euro, Reuters reports.
The traders' association rejected the government's accusations, arguing that their members are not raising prices for profit but because of rising costs of raw materials and energy.
Croatia, with annual inflation at 10,8 percent, reported one of the highest inflation rates in the EU last year, the British agency reminds.
Martin Evačić from the trade sector of the Croatian Association of Employers said that the prices only increased for a small number of products.
"In 2022, prices increased by 15 to 20 percent. They certainly did not jump during the conversion period," Evačić told Croatian media. "I think this is not about a war between the government and traders, this is the pressure of the government and its need to do something to curb inflation," he said.
However, Igor Vujović, president of the Croatian Consumer Association, said that consumers are faced with a price increase of five to 20 percent per day, depending on the product. "Prices are going wild," he told Reuters.
Neighboring Slovenia, which was the first of the Eastern EU countries to introduce the euro in 2007, also recorded an increase in inflation of 7 to 8 percent after joining the eurozone, but managed to reduce it within three months.
After two weeks of intensified controls, Croatian inspectors found that around 40 percent of companies had unjustifiably increased prices and fined them 234 euros. Fines for companies are 000 euros and up to 26 euros for individual traders.
"Konzum" and "Lidl", two leading food chains in Croatia, stated in separate announcements that they did not increase prices after January 1.
However, as they struggle to cope with the rising cost of living, consumers have also noticed a difference. "I noticed an increase in food prices," Domagoj Bregant from Zagreb told Reuters. "It's a problem because food is very expensive compared to my current salary."
Some opposition leaders criticized the government for introducing the euro at a time of high inflation and the energy crisis caused by the war in Ukraine, without sufficiently reforming the economy.
The government has long promoted the benefits of using the euro, arguing that it will strengthen the economy, improve the climate for investors and make Croatia more resilient to external shocks.
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