In global markets, prices of grains, vegetable oils, dairy products and other staple foods have declined from the all-time highs they hit in 2022, but this decline has yet to reach supermarket shelves, with households in Europe to experience the worst punctuality crisis in a generation.
Food prices in the EU rose by 16.6% in April on a year-on-year basis, according to Eurostat, twice the rate of headline inflation of 8.1% (https://ec.europa.eu/eurostat/cache/website/economy/food-price-monitoring/). Some of the biggest increases were in the prices of basic food items, with the cost of eggs rising by 22.7%, fresh milk by 25% and sugar by 54.9%.
Government interventions across Europe
Soaring food prices are prompting increasingly unconventional interventions by governments, which are trying to calm consumer anger while creating a safety net for the most vulnerable. It is noted that since the 1970s in Western economies there has been no attempt at generalized price control.
Central and Eastern European countries are most affected by rising prices. Hungary and Croatia moved to cap the cost of essential items to protect the most vulnerable, who tend to spend more of their income on food.
In Hungary, supermarkets began to put a ceiling on purchases, forcing consumers to visit multiple stores or shop every day.
In Greece, the government cut retailers’ profit margins to keep prices down.
In richer economies, France has negotiated a looser deal with supermarkets to offer a selection of items at the lowest possible price. It is noted that the French government is pushing for the resumption of annual negotiations between retailers and suppliers in order to lower food prices. According to Economy Minister Bruno Le Marie, this means the “inflationary spiral” could be broken by autumn.
Spain is one of several countries that have reduced the value added tax on food. Others, such as Italy, are under pressure to rein in the cost of favorite foods such as pasta.
