"There has been an accelerated increase of inflation over the past few months," but the government still forecasts that the year-end inflation rate would be about 2.4 percent, Finance Minister, Zdravko Maric, said on Tuesday.

Based on data release by the state statistics bureau on Tuesday, inflation in October was 3.8 percent, the highest monthly increase since February 2013.

Addressing a conference of Croatian exporters, Maric added that that effect “was not surprising given all the circumstances,” primarily on the global level. However, the overall inflation rate in Croatia is not deviating from the EU average,”which is good,” said Maric.

He also said that announcements by European institutions were good, primarily the European Central Bank (ECB) and “some other similar global institutions” regarding the “fading out” of that effect over the next two years. However, he said, we “cannot wait for that to occur by itself”, so “we need to observe all monetary and fiscal policy possibilities” for inflation to be retained at a tenable level.

He said that the main driver of inflation is the price of energy and food, although the consumer price index tracks prices of about 900 different articles.

HNB rep: Inflation concentrated on a relatively small number of products

The central bank’s chief economist, Vedran Sosic, said that people perceive inflation as being higher than official statistics suggest. He explained that that is because the perception of the rise in prices is focused on a relatively small number of products – those being products that are purchased most frequently, such as food products. He added that prices of certain raw materials were already falling, such as aluminium and iron ore.

President of the Croatian Association of Exporters (HIZ) Darinko Bago said that in the first eight months of 2021, industrial production increased by 7.6 percent year-on-year while turnover “in the financial sense” increased by 17.4 percent. The difference between volume and turnover in fact relates to the increase in prices that occurred.

“If the EU does not stop these potential inflation trends, Croatia could, in addition to current inflation, be faced with imported inflation and that could be quite awkward because Croatia has a lot more problems than other economies, particularly developed ones in the EU,” warned Bago.