Price rises in Croatia following euro adoption

Observation

On 1 January 2023, Croatia adopted the euro as its official currency. In the first month after the introduction, prices rose by an average of 3% according to the Croatian Bureau of Statistics. In practice, the increases were much larger. Local products disappeared from shelves, replaced by Western European goods. Camping prices rose by up to 70%. Brie cheese went from €2.85 to €4.50. Many products doubled in price.

Context

The price increases affect both the variety of local products and access to tourist facilities. Campsites that attracted loyal guests for years are turning into glamping resorts with prices beyond the reach of families and budget tourists. Reservation costs for a standard grass pitch rose to €100, an increase of 200% compared to previous years.

Reading

The increases are partly explained by inflation (about 10%), but the actual price jump of 40 to 50 percent points to another mechanism. When the tourist season gets shorter but profit margins must stay the same, raising prices is the simplest strategy. This combines with euro adoption, which masks but doesn’t cause the price shift.

The consequences are measurable: declining purchasing power, less variety in local products. Potentially even an increase in poverty and fewer tourist visitors.

Notes

The Croatian government has taken measures: regulation of fuel prices and making more than 40 basic foodstuffs affordable. Consumers can help by supporting local products and finding alternatives. The question is whether these measures are enough when the underlying incentives, short season and high profit expectations, stay the same.