Finance Minister: 'Slightly higher' inflation will continue for a while, no reason to panic

The Croatian Bureau of Statistics released its first estimate, according to which inflation in December 2024 was 3.4% compared to December 2023, while it increased by 0.1% compared to November 2024. This is the third consecutive month in which inflation has accelerated year-on-year, after 2.2% in October and 2.8% in November. According to the estimate, inflation for 2024 was 3%.

Also, according to Eurostat’s flash estimate published on Tuesday, Croatia’s annual inflation rate in December 2024, as measured by the Harmonised Index of Consumer Prices (HICP), was 4.5%, the highest among all eurozone member states.

"Inflation will decrease, but not at the pace we all want"

After a meeting of the ruling coalition on Tuesday, Primorac told the press that inflation in 2024 had risen in line with the Ministry of Finance's forecasts. It is expected to slow down further this year and especially in 2026. The government estimates that it will reach 2.7% this year.

He said inflation "will remain at slightly elevated rates for an extended period of time" given circumstances in Europe and the world, including geopolitical shifts, Russia's aggression against Ukraine and rising energy prices.

According to Primorac, the "normal inflation rate", which ensures stable economic growth, is around 2%, and the Croatian rate is "slightly elevated" It will decrease, "but not at the pace we all want."

The government is not taking inflation lightly and has used all available tools to curb it, including capping the prices of electricity, gas, fuel and certain other products.

He said that "these are indeed slightly elevated rates of inflation" and explained that with an average inflation rate of 3% in 2024, something that cost €100 a year ago would "normally" cost €102 today, but in reality costs €103. "Of course, this can be a significant burden for our citizens with the lowest incomes, but I do not think there’s any reason to panic about it."

No instant cure for inflation

When asked about a windfall tax, Primorac said it was introduced as a one-off measure and served its purpose at the time.

He said the idea of reintroducing this tax was mentioned for "media political purposes" and asked "some commentators from the media political spectrum" why they thought market participants would not raise prices again by the amount of this tax if it was announced in time.

Primorac said no one should fall for the idea that there is an instant cure for inflation.

"I have not seen any concrete proposals or advice from these critics. They just say the measures come too late... They are spreading panic and pessimism for which there is really no reason. If they really understood the economy, they would know that spreading a negative social atmosphere could jeopardise economic growth, the investment climate and, as a result, inflation."