The chief economist of the Croatian Employers Association, Hrvoje Stojić, said on Thursday food prices and the prices of food products would become more stable and lower once Croatia had a stronger and more competitive domestic production sector.

Asked about the rising inflation rate, Stojić told reporters tourism played a significant role.

He pointed out that Croatia is unique in that the number of consumers more than doubles in a short period of time.

He said Croatia used to be below the EU average in terms of service prices, but that these have since increased rapidly.

Asked whether prices could remain at last year’s levels, Stojić said it was a positive sign that the annual inflation rate was expected to fall in the second half of the year.

Regarding food prices, he said economists had repeatedly emphasised that in addition to lowering the state’s tax burden, Croatia should strengthen its domestic food production. In a regional context, Croatia has one of the highest trade deficits specifically in agricultural and food products.

We should encourage investment and reduce regulation in order to attract capital. Once we have a stronger and more competitive domestic production base, food prices will rise more slowly and become more stable, Stojić said.

He believes Croatia should curb public sector wage growth, which has reached around 58% over the last two budget cycles, the highest level in the EU.