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Competition Council looks at steep food price rise

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Following a notification by the Minister of Agriculture, the Competition Council has started an inquiry to determine the causes for the steep rise in food prices this month, with the widening budget deficit coming in the crosshairs as one of the factors that could prompt a rise in imports and implicitly put pressure on inflation, Competition Council president Bogdan Chiritoiu told AGERPRES

He said that some price increases, like in the case of eggs and butter, are apparently of regional scale, but this would still not fully justify the nationwide price hikes. 

Asked whether there is a suspicion of a collusion among retailers, Chiritoiu replied that it's too early to make a statement on this. "We will analyze the whole chain, from production to shelf, to see if we have a functional market mechanism on our hands." 

"These are recent developments that occurred this November, given that according to the National Statistics Institute, food prices were just 3 pct higher in October 2017 compared to 2016, similar to the increase in the price of non-food products," he added. 

According to Chiritoiu, the rise in food prices could be the effect of the widening budget deficit. "Excess of demand in the budget deficit translates into imports, so the trade deficit increases. Therefore, having a budget deficit attracts imports, prompting the drop of the exchange rate and generating inflation. Since a considerable amount of foods comes from imports and the domestic leu is losing ground to the euro, all this generates a rise in prices. These are the laws of the economy," Chiritoiu explained. 

Farmers are also requesting the authorities to step in, arguing that although they are selling cheaper than a few weeks ago, the products reach the consumer at much higher prices.

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