How will inflation measures affect the average Croatian household budget?

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February 19, 2022 – With rising energy costs, with a particular focus on fuel and gas, continuing to pose challenges for business owners and average citizens, how will government measures on inflation really affect the average Croatian household budget?

As Poslovni Dnevnik writes, after the government presented its inflation measures in an attempt to mitigate the impact on the standard of living of the population, the country’s inhabitants, especially those who use natural gas for their heating, began to precisely calculate the impact of each of these measures on the impact on the average budget of Croatian households.

It should be noted that the government has decided to reduce the VAT on gasoline from 25 to only 5%, and this will be the case from April 1 this year to March 31 next year. After this period, gas and heat will remain permanently at the VAT rate of 13%, which means that they will both be included in the electricity costs. In addition, the government will subsidize the price of gas for all households, with direct support of 10 lipa per kilowatt hour, or about 20% of the projected price of 66 euros per megawatt hour. The measure related to this subsidy will cost 600 million kuna.

Guided by these data, Glas Slavonije / The Voice of Slavonia writes that as far as gas is concerned, it would have been up to 76% more expensive on April 1, but with these recently revealed government measures, this increase will amount to a maximum of 20% , depending on stock market prices.

The average family in Croatia now pays 4,950 kuna a year for gas. Without any government intervention, this annual cost would increase by a worrying amount of 3,762 kuna, which means that the average budget of a Croatian household would have to allocate 8,712 kuna or 726 kuna per month for gas. Only by lowering the VAT rate from 25% to 5% would the bills increase by 48%, or 2,376 kuna, and with a direct subsidy to households, the increase could reach 20%. This means that from April 1, the average budget of a Croatian household will have to allocate up to 990 kuna more for gas, or 82.50 kuna more per month.

To find out more, see our section dedicated to lifestyle.

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