For many entrepreneurs — and citizens alike — every price change means adjusting business and personal strategies, and constantly searching for new ways to survive in an increasingly challenging market.
Inflation in Croatia and the EU
Inflation in the European Union, and consequently in Croatia, has multiple causes. It is well known that the pandemic significantly disrupted global supply chains, leading to sharp increases in the prices of materials and raw resources. In addition, geopolitical uncertainty — particularly the war in Ukraine — triggered an unplanned surge in energy prices, which inevitably spilled over into almost all sectors of the economy. Internal market imbalances, such as labour shortages in certain industries, have also contributed to inflationary pressures.
Croatia finds itself in a particularly interesting position. By joining the eurozone, it adopted a shared monetary policy with the rest of the euro area. At the same time, it continues to face structural weaknesses — high dependence on food and energy imports, strong tourism seasonality, and relatively low levels of industrial production and manufacturing. For small and medium-sized enterprises, which make up more than 99 percent of the Croatian economy and employ around 70 percent of the workforce, inflation is not an abstract concept from Eurostat reports, but a direct threat to survival.
Since joining the eurozone, inflation in Croatia has broadly followed the European average, with occasional spikes above it, particularly in the food sector. While some Western European countries experienced milder price growth thanks to stronger domestic production, Croatia often saw faster and more abrupt price changes due to its high import dependency.
The Role of EU Funds
For years, the European Union has been investing billions of euros to support economic development, and Croatia is currently among the countries drawing significant amounts of funding per capita. Through the National Recovery and Resilience Plan alone, Croatia has access to more than €9 billion, a large share of which is directed towards digitalisation, the green transition, and strengthening the resilience of small and medium-sized enterprises.
For entrepreneurs, EU funding facilitates access to digital tools, software, renewable energy sources, export capacity building, and investment in research and development. In the long run, this enables better positioning both on the domestic and international markets.
Do EU Funds Also Contribute to Rising Prices?
To a certain extent — yes.
Large inflows of capital increase overall demand, which can create upward pressure on prices, particularly in sectors with limited capacity, such as construction. Entrepreneurs applying for EU-funded projects often find that quotes for the same works increase significantly within a few months. Given the lengthy evaluation and approval periods, this can create serious challenges during project implementation.
The Primary and Secondary Role of EU Funds
EU funds therefore play a dual role. On the one hand, they help “keep businesses afloat” by enabling investments that would otherwise be financially unattainable. On the other hand, the sudden injection of large amounts of capital into the market can generate additional inflationary pressure.
This raises a key question: how can this be balanced?
The answer lies in smart allocation of funds — carefully planned calls aligned with real market needs — and in projects that reduce costs and dependencies in the long term. Investments in energy efficiency, local production, and digitalisation of business processes are prime examples. In such cases, EU funds do not act merely as “fast money” that inflates prices, but as long-term investments in economic resilience.
Practical Challenges and Unequal Access
In reality, many EU-funded projects require pre-financing, involve lengthy administrative procedures, and demand a high level of expertise in project preparation. As a result, the smallest companies — often those most exposed to inflation — are frequently left behind due to a lack of financial and organisational capacity to compete for funding.
Those who do succeed, however, can make a substantial leap in business development. Such investments increase resilience to future crises and create long-term stability and predictability of income.
Conclusion
Inflation is here, and it will not disappear overnight. It is reasonable to assume that prices will continue to rise alongside global geopolitical uncertainty. In this context, EU funds are not a magic solution, but they remain an important tool.
Their impact depends on how they are used. If funding is channelled into projects that strengthen productivity and resilience over the long term, EU funds can become exactly what entrepreneurs need in their fight against inflation. If, however, they are treated merely as a short-term capital boost, the risk of further market distortions and additional pressure on prices remains high.
The real question is not whether EU funds represent salvation or a threat — but whether we are prepared and capable of turning them into an opportunity for long-term, sustainable growth.
Sources: Eurostat: Inflation in the euro area (2025); Croatian National Bank (HNB): Overview of Macroeconomic Developments (2024); Ministry of Finance of the Republic of Croatia: Reports on the Use of the National Recovery and Resilience Plan; European Investment Bank: SME Access to Finance Report (2024)
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