Can selective price controls fight off inflation? Lessons from milk products in Croatia

Ivan Mužić and Ivan Žilić

Applied Economics Letters, 2025, vol. 32, issue 13, 1859-1863

Abstract: Using a difference-in-difference identification strategy and weekly data on a number of local stores, we estimate the causal effects of the price-ceiling policy, implemented in September 2022, on prices and availability of milk products in Croatia. We find that the regulated milk was around 35% cheaper due to the price caps, and find no effect on its availability. We find that the price of substitutes did not increase, but for some of them, we do record an increase in their availability. We show that the effect of milk price ceilings on overall inflation is negligible, but also that this inflation-soothing effect is more prominent for poorer households.

Date: 2025
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DOI: 10.1080/13504851.2024.2331654

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