Latvia's food prices poised to continue skyward trajectory

  • 2008-01-16
  • Staff and wire reports
RIGA - Food prices in Latvia, which grew nearly 20 percent last year, are set to continue the rapid rate of increase throughout 2008. Both past and future increases, which are significantly higher than those in either Estonia or Lithuania, have triggered no small amount of finger-pointing among retailers and producers as to who is to blame.

Retailers insist that producers are to blame. Dace Valnere, a spokeswoman for Rimi Latvija, explained that surcharges on product prices do not change and that shelf prices are the result of producer-based increases.
She said that, based on producers' submissions of purchasing prices, prices will continue climbing this year.
"Dairy product prices in Rimi Latvia stores will grow 15 - 20 percent on average," she said. "The most considerable price rise will be for cheese, chocolate sweet cheeses, ice cream, milk, and sour cream."
What's more, "Prices for bread of separate producers will also increase by 20 percent, as well as flour prices by 20 percent, oat-flakes prices by 17 percent," Valnere told the Baltic News Service.

Ivars Andins, a spokesman for Maxima Latvija, said that all price increases demanded by producers are reflected on store shelves.
"The average surcharge on goods at Maxima Latvija is 21 percent. It is lower than in most West European retail chains," he said. "Besides, the surcharge has not changed since 2004. The surcharge is even lower for essential goods and products."
He added that price hikes in December 2007 were the result of food producers increasing their prices in November.
"Regretfully, it should be admitted that Maxima Latvia received similar mass price rise requests in January as well. For example, a request of a large dairy processing company for raising prices on all products by 13 percent on average," Andins said.

Food prices increased nearly 20 percent last year in Latvia. By comparison, foodstuffs increased 10 percent in Estonia and 11.1 percent in Lithuania on average.
The head of the Latvian Agricultural Market Promotion Center, Inguna Gulbe, said that prices jumped throughout Europe in July-August, and a steep price rise on goods started in Latvia in December 2007.
"Producers are starting to accommodate and adjust according to the current economic situation," she said.
Gulbe added that the producers cannot raise the prices without grounds. "They have competition as well, so they are unable to inflate prices," she said.

Still, some analysts have suggested that cartel-like arrangements in some sectors could be a factor behind the sharp rise in consumer prices.