Has the euro changeover actually brought on further inflation in Croatia?

Matteo Falagiarda, Christine Gartner, Ivan Mužić and Andreja Pufnik in this blogpost:

The opposite international locations adopted Euro in low inflation section. Croatia adoption is throughout excessive inflation section:

Whereas the euro brings clear advantages for Croatia and its financial system, some customers have expressed considerations about attainable extra value will increase following the changeover from the nationwide foreign money to the euro. These fears have an extended historical past within the euro space. Media and elements of the general public have typically suspected that service suppliers akin to eating places specifically exploit the chance of a foreign money changeover to boost their costs exorbitantly. This debate in regards to the value results of changeovers to the euro has taken place in a number of international locations because the entry into circulation of euro banknotes and cash in 2002. The German language even developed a phrase for this perceived impact: “Teuro” (from “teuer”, which implies “costly” in German). So what’s the image in Croatia two months after it adopted the euro? In a nutshell, there’s a delicate value impact within the providers sector however general little proof of a broad-based extraordinary value impact approaching prime of the present inflation development.

However let’s take a step again: value rises linked to the introduction of the euro would possibly stem from mounted prices related to the changeover, rounding practices to engaging value ranges, but additionally unfair pricing behaviour by companies because of an absence of value transparency and competitors in sure sectors. Croatia is a relatively particular case in comparison with earlier changeovers: it’s the first changeover happening in a high-inflation setting within the euro space. This presumably makes it simpler for companies to cost greater than could be justified by will increase in prices or surges in demand. Though Croatian authorities have carried out a number of measures aimed toward avoiding unjustified value will increase, together with a comparatively lengthy interval throughout which twin costs should be displayed, uncommon value will increase have been reported because the changeover, particularly within the providers sector. However all in all, the impression on shopper costs and value perceptions in Croatia approaching prime of the overall inflation development appears to have been contained up to now.

This entry was posted on March 9, 2023 at 1:40 pm and is filed beneath Academic research & research papers, Central Banks / Monetary Policy, Economics – macro, micro etc, Financial Markets/ Finance. You possibly can comply with any responses to this entry by means of the RSS 2.0 feed.
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