Food prices to stabilize

  • 2008-11-05
  • By Justinas Vainilavicius

FAIR FOOD: Food prices are set to even out after months of drastic increases.

VILNIUS - After months of skyrocketing food prices, experts say consumers can finally look forward to cost stabilization.
Marius Busilas, director of the Lithuanian Retailers' Association, told the Delfi news portal that food prices are not going to increase and some products may even get cheaper. Meat prices, primarily pork, may go down in the beginning of the next year, as fodder and pigs are already cheaper.
Tomas Vaisvila, communications director of IKI chain supermarkets, said he does not believe that there is any tendency to falling prices.

"Whether the prices are going to fall depends on the producers, and also on energy and salaries expenditure. They may fall because gasoline prices decreased, but other costs are up, meaning only some products, such as flour, may lower in price, whereas other grain products, including bread, are not showing any signs of getting cheaper although the cost of producing them is down," Vaisvila said.
Food prices were increasing rapidly until the beginning of summer, with producers and major retailers blaming rising oil prices. Oil prices are down now, however, but food prices remain the same. Some experts, including Lithuanian Farmer's Union chairman Jonas Talmantas, say that supermarkets used the situation to increase their profits.

"Farmers are the biggest losers here, but people think that we are the ones that profit most because of the rising prices, which is not [true]. For instance, we get only 46 cents per liter of milk, whereas you pay about five times more, depending on the fatness of the milk, in the supermarket," Talmantas said.
Farmers initiated that all milk packages would contain the information about what share of the final product price gets the farmer, the producer and the reseller. That did not pass.

"Major retailers, including Maxima, IKI, Norfa and Rimi hold a food market monopoly by destructing small businesses, such as farmers' stores, which also adheres significantly to the food prices," Talmantas said.
Vaisvila admits that supermarkets do have influence over food price. However, to raise prices more than they have to be raised is not their goal. He also said that retailers negotiate with the producers for best deals and, at least for now, are able to dictate the terms of the deal.

"If the local production gets too expensive, we can import it from other European Union countries. It is not fair to local producers, but we are trying to offer our customers the best deals," Vaisvila said.
Rising food prices have even influenced some social groups. With household expenses rising dramatically, a high inflation rate and salaries remaining the same, food prices are increasingly going to be a problem for a wider group of people.

Vaisvila said that customers' reaction to this situation would be clear in February, after winter holidays season, as it is traditionally the time when people tend to spend much more money.
Birute Stolyte of Statistics Department public relations division said that the amount of money Lithuanians spent on food and non-alcoholic drinks in September totals 25.7 percent of all purchases. It is 15.7 percent higher than compared to September 2007.

All other expenses have risen as well, except the ones on communications and clothing, which have declined.