There will be no dramatic food inflation, in fact: the price-stopped products may even be cheaper

By: Trademagazin Date: 2023. 07. 12. 14:23

The removal of price controls on regulated food products in August does not lead to a significant increase in prices. On the contrary, some food items can be purchased even cheaper than the fixed prices. Claims of dramatic price increases after the end of price controls are not supported by publicly available data, which clearly indicate stagnant or slightly decreasing prices. There is only one exception, as the price of that particular product may increase significantly.

The news suggesting that the removal of price controls in August will result in a dramatic price increase is contradicted by the available market data, making these claims unfounded. The prices of currently regulated food products will practically remain unchanged with the removal of price controls, and in fact, the prices of some products may decrease significantly.

According to the government regulation on the removal of price controls, the adjustment of pricing for the eight affected food items will not occur immediately but in two steps following a transitional period. While regulated pricing ends in August, the government regulation prevents traders from imposing significant price increases in response.

Although the removal of price controls starting from August would theoretically allow retailers to apply higher margins to offset the losses incurred during the period of price controls, they will not have the opportunity to do so until October at the earliest.

The regulation stipulates that during the transitional period following the removal of price controls, from August 1st to September 30th, retailers cannot sell the affected food items at prices higher than their procurement costs. Furthermore, since June, mandatory discounts are also applicable to the eight food items, requiring retailers to offer at least two products each week with a minimum 15% price reduction.