Sunday, December 02, 2007

Sharp rise in food prices in Spain

Government recognises food prices have increased more in Spain than the rest of the EU

Last week Ignacio Cruz Roche, the Managing Director of Commercial Policy for the Ministry for Industry, admitted that ‘food prices have gone up more in Spain than the EU average over the last two months’. If comparisons are made between food price increases between Spain and the rest of the EU from July to October this year Spain loses out by 6 decimal points in July, 7 in August, 1 in September and 1.7 in October.

According to Cruz Roche these difference are difficult to understand and he has appointed the National Competition Commission to investigate whether there has been any price fixing within the food industry.

In a report compiled by the Cerdá Institute on the price of food distribution a sharp increase can be seen in prepared food for commercial distribution. While the price of meat, fruit and fish can be seen to go up and down according to where they are sold this is not the case for packaged food where there appears to have been uniform price rises of over 4% between April and October this year.

Moreover it looks likely that prices will continue to increase despite the fact that between January and October this year they rose by 6.1% which is the highest increase since December 1995. According to Cruz Roche. 'the cost of food and alcoholic drinks in Spain are 8% below their real price’ (if you take into account per capita income). In his opinion only Portugal and Holland have lower prices than Spain. When asked if this meant that price rises would continue he said that if per capita income increased then it is reasonable to expect prices to increase. However, he also added that this did not necessarily mean that price rises were justifiable in the short term.

Cruz Roche pointed out that many prices rises were down to the increase in the cost of raw materials throughout the world and when they started to go down again ‘prices for the consumer would reflect this’. In fact he said that the price of milk, eggs, bread, chicken and yogurt had remained the same in Spain and had not gone up in the first two weeks of November.

Ignacio Cruz Roche, also defended the food distribution sector saying that it had been accused by the agriculture sector of inflating prices and taking advantage of price rises in raw materials. When asked the real reasons for recent price rises Cruz Roche said that his department was investigating the food chain to find out where the increases were being produced. Once again he denied that it was down to the increases in distribution saying that net profits for this sector hardly rose above 4%.

In his opinion the agriculture sector always looked at the difference between the price paid for raw materials such as lemons and onions and the price in the shops (differences of 297% and 762%). He said that sometimes it was ‘more expensive to distribute than to produce’. He added that 25% of agricultural produce was not consumed because it didn’t reach its destination in an acceptable condition and ‘to the price of a lemon hanging on a tree you had to add transport costs, insurance costs and the cost of handling in a shop’.
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posted by Euroresidentes at 11:51 AM



Blogger Petrus said...

Quite agree - food prices are shooting up ..

12:50 PM  

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