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Written by Piero Messina
Brussels has welcomed Croatian citizens to the Monetary Eurozone as only it knows how: a mountain of increases with the prices of food and raw materials literally going crazy. A dramatic situation for a country already grappling with inflation at 13 percent per year. The changeover from the “kune” currency to the euro costs Croatia price increases ranging from 5 to 20 percent compared to prices before the introduction of the single European currency. As usual, no one has complied with the official conversion rates and with the excuse of rounding prices, tariffs and products, even those of basic necessity, have skyrocketed. It is a story that always happens when a nation adopts the euro as its official currency.
Exactly twenty years ago the euro came into force. In Italy, which had adopted a “crazy” exchange rate (equal to 1936.27 lire for one euro), it happened that the prices of everything that was tradable practically doubled from one day to the next. In short, even in Croatia the new life under the single currency of Brussels is not starting well. The country adopted the euro only ten days ago and there is already a sharp rise in prices, especially for food and services. These increases are considered unjustified by the government, which has announced an intervention in the next few days.
Most of the increases are roundings which in many cases greatly exceed the conversion rates. For this reason, many traders, restaurateurs and even some supermarket chains have been accused by the press of having taken advantage of the currency exchange. The wrath of citizens has also exploded on social networks, denouncing, among other things, price increases for bread and butter of up to 30%. Prime Minister Andrej Plenkovic also accused “a part of traders and entrepreneurs of taking advantage of the transition from the Croatian kuna to the euro with irresponsible behaviour”, who announced possible interventions if the situation does not normalize by Friday. The head of government said that the executive has strong tools “that it will not hesitate to use”. Possible interventions include targeted increases in taxes and duties, abolition of gas and energy subsidies or even the freezing of prices for hundreds of items at December levels. The country is grappling with inflation already at 13% which could accelerate sharply in the next surveys due to price adjustments linked to the changeover to the euro.
