"The government will design a package of measures to buffer energy price hikes for citizens if prices continues to rise," Prime Minister, Andrej Plenkovic, said in Parliament on Wednesday.

“If prices continue to rise, apart from capping fuel prices, we plan to raise social benefit allowances for vulnerable households, and as for electricity and gas prices, we will rely on (state power board) HEP, which can share the burden and buffer the blow to Croatians,” Plenkovic said answering a question from opposition MP Mirela Ahmetovic of the Social Democratics, who asked what he planned to do about rising inflation.

The “third element,” Plenkovic said, would be cutting the VAT rate on energy, which is currently set at 13 percent on electricity, and 25 percent on natural gas. He explained that energy price hikes occurred because of supply disruptions, Covid, and high demand.

“Households in Croatia still haven’t seen a rise in the price of electricity, nor will they experience it before 1 April. It’s the same with the price of gas,” Plenkovic said.

Plenkovic did not specify what kind of price hike is likely to trigger the government’s measures.

Retail prices of electricity and gas in Croatia are capped per normal practice via a standardized formula which gets updated periodically and major suppliers are state-owned. The current price cap is expected to expire on April 1, and analysts have warned that the new prices which will come into effect after that date might jump by 100-200 percent.

“Whether the prices of electricity and gas rise or not, citizens will pay for the increase in prices of basic groceries,” Ahmetovic replied.