Inflation accelerated further in November. The annual rate of consumer price growth rose from 2.2% in October to 2.8%, mainly due to rising energy and food prices.

Within one month, energy prices rose by 2.5%, while food prices increased by a further 0.2%. The harmonised index of consumer prices (HICP), which is comparable for all EU member countries, paints an even gloomier picture and stands at 4% annually compared to 2.3% in the eurozone. According to this index, only Belgium has a higher inflation rate than Croatia, reports the daily newspaper Vecernji list.

What is the real inflation rate?

Zrinka Zivkovic-Matijevic, chief economist at the RBA, has calculated that higher prices for food and services account for 90% of this year’s inflation, which totalled 2.9% from January to the end of November.

The government only liberalised electricity and gas prices in November, leading to a 10% increase in two stages. The first electricity price increase of 6.5% took place in November, with the rest to follow early next year.

Fuel prices are adjusted weekly based on market conditions and geopolitical factors. Hrvoje Stojic, chief economist at the Croatian Employers’ Association (HUP), noted that gas prices rose by 21% to EUR 47.2/MWh in November due to the turbulence on the European gas market, particularly between Russia and Austria. Meanwhile, the price of Brent crude oil remained stable this month at $72.9 per barrel.

Most household income is spent on food and utilities

The Croatian government has factored the impact of electricity and gas price increases into its inflation forecast and expects average inflation to rise by 2.7% next year on top of current prices. Similar forecasts have also been made by other institutions and bank analysts.

According to the Croatian Bureau of Statistics (DZS), the official inflation tracking basket includes 910 different goods and services whose prices are monitored in the cities of Zagreb, Slavonski Brod, Osijek, Sisak, Rijeka, Pula, Split, Dubrovnik and Varazdin.

The impression is that inflation is much higher because most household income is spent on food and utilities, especially in low-income households. A private consultancy, Nielsen IQ, which tracks consumer trends, reported in a study for the website Jatrgovac that the prices of cooking chocolate have risen the most this year – by 41%. Isotonic drinks rose by 16%, detergents by 15%, while chocolate bars, vitamins, minerals and sunscreen rose by 13%.

What has become cheaper?

There were some price reductions last year. The price of sugar fell by 29% (37% since the beginning of the year), toilet paper by 7%, eggs and wet wipes by 6%, frozen dough by 4%, flour and hot dogs by 3% and cheese by 1%.

Lower prices have generally led to higher consumption. A food basket of around 100 items is 5.5% more expensive than at the beginning of the year, but sales volumes have increased by around 2%. Private label food brands recorded higher sales volumes compared to branded products with lower price increase rates.

In the 10 most important food categories, strong sales growth was recorded for alcoholic beverages and ice cream. Sales of spirits rose by 9%, while ice cream recorded a price increase of 10. Sales of fresh meat rose by around 6%, with a slight price increase of 2%, while sales of salami stagnated due to a price increase of 8%.

Of the 94 food categories analysed, prices were only reduced in 15

Sales of coffee increased despite falling volumes, while sales of milk fell in terms of both volume and value due to rising prices. Sales volumes of chocolate bars, milk, coffee, wine, biscuits and pickled vegetables have fallen.

In non-food items, sales of nappies fell by 2%, reflecting the general trend of falling birth rates.

In the first nine months of the year, the largest increase in value was recorded for sports drinks (60%), which can be attributed to increased consumption and higher prices.

Of the 94 food categories analysed, only 15 recorded lower prices, while 24 saw a decline in sales volume. The prices of around 50 non-food items have risen by just over 3% since the beginning of the year.