Effects of the Adoption of the Euro on Consumer Prices and Inflation Perceptions: An Overview of Experiences and Assessment of the Possible Impact in Croatia
|JEL||D12, D84, E31, F33|
euro, inflation, perceived inflation
Numerous research results show that the effect of the conversion of national currencies to the euro on the growth of consumer prices in euro area countries was generally mild and one-off. A slightly more pronounced increase in prices due to conversion was registered for a small number of products, mostly in the services sector, such as services in restaurants and cafés. In accordance with these experiences, the effect of the conversion of the kuna to the euro on the overall level of consumer prices in Croatia is expected to be mild. The paper also examines the main determinants of the growth in perceived inflation in the aftermath of the conversion and measures that proved to be effective in limiting the effect of euro adoption on the rise in consumer prices and perceived inflation.