During an appearance on N1 Studio Live with Igor Bobic, economic expert Ljubo Jurcic commented on rising prices and the fact that inflation in Croatia has risen the most of all eurozone countries.

Inflation in the eurozone accelerated again in December. According to preliminary calculations by the European Statistical Office published on Tuesday, consumer prices in Croatia have risen the most, almost twice as much as the average.

“The real problem is that we do not have continuous and stable income growth”

“The structure of our economy is bad. We are a very vulnerable economy, and on the other hand we import over 60% directly and even more indirectly. If we look at prices in Europe, where these goods come from, these are much more developed countries with much higher incomes. In economics, we consider inflation of 5 or 6% to be moderate and not requiring action, but of course that applies to countries with incomes that are 2 to 3 times higher than ours,” said Jurcic.

The job of politicians has been to ensure that wages rise faster than prices

“Inflation will not fall significantly. That in itself is not so problematic. The real problem is that we don’t have continuous and stable income growth. We do have growth, but the base is too small. Slovenians have 50% higher productivity than Croatians. Imagine if we only had 20% higher per capita production. Then we wouldn’t even be having this conversation,” he added.

A vicious circle

“Historically, prices have risen, but the job of politicians has been to ensure that wages rise faster than prices. Since we import more than 60 per cent of what we consume, much of the higher costs go abroad when prices rise here. When domestic goods become more expensive, we pay more, but workers benefit through higher wages. It’s a vicious circle,” explains Jurcic.

He claims that inflation is natural, but emphasises the need for good economic policies that focus on innovation and creating better employment opportunities.

In economics, we consider inflation of 5 or 6% to be moderate and not requiring action, but of course that applies to countries with incomes that are 2 to 3 times higher than ours

“Markets do not create production, only competition. To change that, we need a transitional step, which we have not taken. We have closed jobs and paid high redundancy payments. If we had invested just half of the money we spent on redundant workers in development, we would be in a better position today,” said Jurcic.

Economy Minister Ante Susnjar called on citizens to boycott retailers who raise their prices unjustifiably. “The minister’s job is to explain how production should be increased,” Jurcic said, adding: “He is a poor soul who is reduced to making up what people want to hear.”