How Has Coronavirus Pandemic Altered Croatian Consumer Habits?

Lauren Simmonds

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As Poslovni Dnevnik/Ana Blaskovic/Jadranka Dozan writes, over recent months, we have often heard how working from home has largely replaced the purchase of fashionable clothing and footwear with tracksuits, slippers and trainers, and how less money has generally been spent on these items since the coronavirus pandemic struck.

Many will also say that their car’s fuel tank is lasting longer, but also that their costs of (tele)communications have increased, as well as the figures on bills for some other “overhead” items. The scale of changes in living and consumer habits today has left a mark on what typical Croatian household consumption looks like.

Among what was looked at in regard to Croatian consumer habits includes data on inflation and the consumer price index (CPI). A few days ago, the Central Bureau of Statistics (CBS) published data for the month of February, according to which, for the first time in the past year, the index of these prices in year-on-year comparisons had a positive note to it. After a 0.3 percent drop back in January, the annual inflation so measured in February also stood at 0.3 percent, but was encouragingly rising.

The CBS consumer price index is calculated on the basis of a representative basket of about 890 products. Each month, about 38,000 prices are collected from within a given sample of outlets.

In order to preserve representativeness, the coverage of goods and services is revised once a year, and given the circumstances of the ongoing pandemic, the CBS has included some new products in its basket for the year 2021. According to the Institute, these are protective face masks, disposable gloves and hand sanitizer.

Back in December 2020, Eurostat issued recommendations to EU member states on the calculation of what are known as ”weights” in order to include the effects of these coronavirus-induced changes in personal consumption expenditure.

As such, in its calculation of the consumer price index, the decline in ”weights” compared to 2020 was recorded in the following categories: Restaurants and hotels, Transport, Recreation and culture, Clothing and footwear, Education, according to the CBS, which delved into Croatian consumer habits during the pandemic.

At the same time, compared to last year, food and non-alcoholic beverages have a higher “weight” attached to them; Housing, water, electricity, gas and other fuels; Health; Communication, miscellaneous goods and services; Alcoholic beverages and tobacco; Furniture, home furnishings and regular household maintenance.

A comparison of the data from this and last (2020) February shows, for example, that the ”consumption weight” for food and non-alcoholic beverages increased from 26 to 27.2 percent, while the share of clothing and footwear decreased from 6.4 to 5.7 percent. The costs of housing and related “utilities” (electricity, water, gas, etc. utilities) and maintenance costs in February last year were 16.3 percent higher in terms of weight, and today their weight is 17.7 percent.

Expenses related to personal transport or personal vehicles (purchase, parts, repairs, fuel) in the structure today make up 13.3 percent, while a year ago they “weighed” more than 15 percent. The ”weight” of transport services (road, rail, sea) was reduced from 1.5 percent down to one percent. But equally, the weight of expenditures related to communications, primarily telephone and Internet, is expected to continually increase.

The well known British BBC has also been working on adjusting the consumer basket to calculate the cost of living these days. The statistical office over in the United Kingdom has refreshed its list of more than 700 products, not only with those items such as disposable masks, hand sanitizers, slippers or tracksuits, but also with, for example, home workout equipment, smart watches, electric cars, and items which reflect the result of attempted healthier eating trends on that Northern European island.

When looking specifically at Croatian consumer habits however, there was less intervention in the coverage of that same proverbial basket, but the ”weight adjustments” haven’t gone without affecting the value of the IPC.

Back in February this year, consumer prices rose equally (by 0.3 percent) on both annual and monthly levels. Annual inflation across the EU averaged 1.3 percent, still well below the ECB’s target of “close but below 2 percent”, and Croatia is among the 14 member states with accelerating inflation.

The category in the ”basket” when it comes to Croatian consumer habits that pushed up monthly inflation last month was transportation, up 1.7 percent on average. Transportation, which has seen a 13.3 percent drop in the consumer basket, has been affected by higher oil prices, which have been on an upward trajectory on global stock exchanges over the past four months or so. More expensive transport costs back in February was mitigated by 0.1 percent (on average) cheaper food and non-alcoholic beverages. Although the decline is more modest than in transport, a higher ”weight” was crucial in the inflation calculation, as food participates in the basket with as much as 27.2 percent.

Annual inflation, on the other hand, was primarily affected by higher alcohol and tobacco prices. They were 4.5 percent higher in February than they were back during the same month last year (with a so-called weight of 5.2 percent). Growth was also recorded in the category of recreation and culture (1.3 percent) and communications (1.2 percent). In the last year, the prices of food and non-alcoholic beverages were lower by 0.8 percent, while the costs of housing and utilities (water, electricity, gas and other such items), which make up 17.7 percent of household costs, were 0.9 percent cheaper.

With the spectacularly embarrassing failure of plans for rapid vaccination across the European Union, the pandemic looks set to continue. However, the forecasts for this year are still in the realm of optimism.

“With the expected recovery of the economy this year, we expect the return of moderate price growth,” say analysts from Raiffeisen Bank (RBA). In this light, energy should be influenced by a slight recovery in crude oil prices.

“We expect the average price of Brent crude oil to rise above 70 US dollars per barrel in the second and third quarters of this year, and global crude oil inventories will return to pre-pandemic levels by the end of this year. On the other hand, rising food prices will slow down, partly due to the global environment and the normalisation of supply chains. Therefore, we expect that the average inflation rate this year will be around one percent,” they noted from RBA.

For more on Croatian consumer habits, follow our lifestyle section.


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