The increase in EU food prices outpaces inflation

m.dimitrova@klassa.bg


The increase in EU food prices outpaced the general inflation rate of goods in February, month-on-month, according to an analysis of the Ministry of Agriculture and Food. Given that the prices of foodstuffs increased by 0.6%, the overall inflation rate in the European Union reached 0.4%.

Excluding the Fish and Seafood products sector, where prices fell slightly by 0.4%, all other reported categories registered further price increases in February 2011, month-on-month. In general, fruits were 2.2% more expensive, while vegetable prices increased by 1.7%.

Compared to a year earlier, consumer goods prices reached higher levels. There is a particularly noticeable price difference in fruits - prices rose by 8.5%, while the prices of vegetables jumped by 5.5% and those of products in the 'cooking oils and fats' category increased by 4.5%.
This February, food prices marked a leap of 6.2 %, compared to February 2008, or 3.2 % year-on-year. The total annual inflation is 2.8 %, while monthly inflation reached 0.4%.

A similar upward price movement was observed in terms of agricultural commodities offered on the EU market where prices rose further in February 2011, month-on-month. The only exception is the price of cheese which slumped by 1%, as well as that of barley which remained at the same level. The price of soft wheat grew by 6%, while that of durum increased by 8% and that of maize by 4%. The price of skimmed milk powder increased by 8%, while the price of butter grew by 1%, that of pork by 6% and that of chicken meat by 5%.

Mounting food prices have been reported since last year and there are no favourable prospects for this problem to be resolved quickly, commented to Klassa daily, Simeon Elazarov, CEO of the Sofia Commodity Exchange (SCE). He explained that, in 2010, the adverse events affecting wheat exporters such as Russia, Argentina, Australia reduced the production of raw materials which are the basic ingredients of many food products. Meanwhile, consumption is constantly increasing, while stocks are being depleted. The overall picture is hardly rosy and, if no preventive measures are applied, there will be problems all over the world, reckoned Elazarov. According to him, governments have at their disposal the means to intervene. For example, specific quantities of foodstuffs might be made exempt from excise-duty via the use of the state reserve. Duty-free imports can also be boosted. However, all measures should be applied purposefully, after the drafting of a preliminary policy.

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