Croatian govt clashes with merchants over price increases post euro adoption

The Croatian government and businesses were at odds as traders blamed rising prices on inflation following the country's adoption of the euro in January. As soon as the kuna currency was replaced with the euro, prices increased as traders rounded them up in the new currency.

In response, the government introduced measures on January 5, warning traders that fines, the cancellation of energy subsidies, or the raising of taxes would occur unless prices were returned to pre-euro levels.

However, the traders' association has dismissed the government's accusations, claiming that its members are not raising prices to make a profit but rather due to the rising cost of raw materials and energy.

Croatia, with an annual inflation rate of 10.8 percent, reported one of the highest inflation rates in the EU last year.

Martin Evacic of the trade sector of the Croatian Association of Employers has said that prices only went up on a small number of products and “certainly did not rise during the conversion period.”

Despite this, consumers were reporting wild price increases of 5 percent to 20 percent a day depending on the product. Igor Vujovic, the president of the Croatian consumers' association, also said that prices are getting wild.

The government has been conducting increased controls and has found that about 40 percent of businesses had unjustifiably hiked prices and so have been fined EUR 234,000.

Prime Minister Andrej Plenković stated that “raising prices, overshadowing the introduction of the euro and contributing to inflation, it's an unfair practice and will not be allowed.”

With consumers struggling with the cost of living, shoppers have also seen the difference in prices. Some opposition leaders have criticized the government for introducing the euro at a time of high inflation and an energy crisis triggered by the war in Ukraine, while not reforming its economy enough.