HUP Calls for Reduction of Price Disparity in Energy for Businesses and Households

Although inflation is stabilizing, this does not mean it is completely under control given the extraordinarily rapid recovery of real net earnings for employees in Croatia this year, particularly in the service sectors and with more generous collective agreements. Due to continuous pressures on labor cost growth, which is rising faster in Croatia than in the euro area, the absolute priority in curbing inflation must be to accelerate real productivity growth and remaining deregulation to stimulate competitiveness in parts of the service market, writes HUP in its weekly analyses.

– In 2024, we forecast that the inflation rate will range from 3 to 4 percent, which is above the euro area average, but is not surprising given that existing service prices are still more than 30 percent lower than the eurozone average – they add.

Despite a strong decline in market ‘spot’ prices for energy, wholesale European gas prices for summer 2025 (as a proxy for companies for a two-year contract) are about four times higher compared to the pre-crisis period. Some actors also do not rule out disruptions in the energy market ahead of autumn and winter.

In this sense, the question arises about the continuation of measures to support the economy in the domain of energy policy, writes HUP, calling for a constructive discussion on reducing the disparity between energy prices for businesses compared to the prices paid by households. Namely, in most EU member states, the economy pays a lower average energy price than the household sector.

At the same time, we must monitor the sets of measures that EU members adopt so that domestic companies are not at a competitive disadvantage in the single market. It is particularly important to avoid a repeat of the situation from the second half of 2022, when Croatia was among the five EU member states with the highest increase in electricity prices for businesses. As before, all measures and decisions important for business planning should be made in a timely manner to ensure predictability and certainty in business, conclude HUP.