Food prices and consumer frustration put Croatian retailers on alert

Despite continued consumer spending in Croatia, the country’s retail sector is facing mounting pressure as food prices rise, shoppers become more cautious and growth in retail sales begins to slow.

A new sector analysis by the Economic Institute Zagreb, reported by Jutarnji list, warns that retailers are entering a more uncertain period marked by inflation, labour shortages and global instability linked to wars and rising energy prices.

Earlier this year, some Croatian consumers expressed dissatisfaction with high prices through boycotts of retail chains, highlighting growing sensitivity over the cost of living.

According to the institute’s forecasts, the Croatian economy is expected to grow by 2.6 percent this year, while consumer spending could rise by 3.2 percent.

However, a less favourable scenario involving oil prices reaching $120 per barrel and gas prices climbing to €90 per megawatt-hour could see GDP growth slow to 2.1 percent, alongside inflation of 5.6 percent.

The report suggests that price alone will not determine which retailers succeed in the coming years. Instead, businesses that maintain consumer trust, manage costs effectively and embrace technologies such as artificial intelligence are expected to perform best.

The institute stressed that perceptions of unfair pricing could trigger further consumer backlash in 2026, urging retailers to communicate any price increases clearly and base them on real costs.

The number of active retail companies in Croatia fell by 11.3 percent in 2025. Over the past five years, the number of trading firms has declined by 18 percent, even as the total number of businesses across the wider economy increased by 9.3 percent.

Retail wages have also risen due to labour shortages and increased competition for workers. According to data from the Croatian Bureau of Statistics, net salaries in the sector increased by 10.4 percent, although average retail wages of €1,181 remain below the national average of €1,449.

While retail turnover across the European Union grew by 2.4 percent last year, Croatia outperformed the EU average, indicating that domestic consumption remains relatively strong.

However, Croatian retailers continue to lag behind the EU average in productivity, added value per employee and profit margins.

The report identifies three main priorities for retailers: boosting revenue through promotions and private labels, strengthening supply chains and reducing operational costs. Greater use of artificial intelligence, analytics and e-commerce is also expected as companies seek to improve efficiency and address ongoing labour shortages.