Czech food prices have fallen: is the minister really behind it?

SPD leader Tomio Okamura has claimed that food in Czechia has become cheaper thanks to the agriculture minister from his party. Economists and the ministry itself disagree: in their view, the main role was played by the situation on the European market, a good harvest and cheaper inputs.

What Okamura said

Before last year's elections, SPD promised cheaper electricity, gas and food. Year on year, prices of these items are indeed lower. Okamura recalled that the party held “SPD fairs”, where sceptics doubted that butter would ever get cheaper. “Today butter is 42 percent cheaper than a year ago, milk is also 42 percent cheaper, which is a mere coincidence of numbers. Egg prices fell by 14 percent, pork is cheaper too. All of this is the result of SPD having the agriculture minister,” he said, as reported by the portal iportal24.cz.

The ministry itself assesses its role more modestly. According to its spokesman Marek Ota, the fall in prices is driven mainly by developments on agricultural and commodity markets, the stabilisation of energy prices and the easing of cost pressures from previous years. Competition among retail chains and developments across the whole supply chain also play a part. The ministry, he said, has contributed to greater market transparency by publishing price indicators, and it also pointed to the creation of a food ombudsman, whose task is to make the supply chain clearer and promote dialogue between its links. Further price developments, the spokesman added, will depend on the prices of commodities, energy and fuel, as well as wages and other costs.

What analysts say

According to Vít Hradil, an analyst at Investika, food is getting cheaper mainly because of cheaper agricultural inputs and last year's good harvest. He points out that in August food prices fell not only in Czechia. According to Eurostat, they dropped 4.7 percent year on year here, 3 percent in Slovakia and 5.5 percent in Hungary. “Rather than the steps of individual ministers, I would look for regional factors behind this,” Hradil said.

Štěpán Křeček, an economist at BH Securities, explains that milk, butter and pork have fallen sharply across the whole European market. The reason is China's customs policy, which complicates exports of these products from the European Union: unsold goods pile up in Europe, pushing prices down. “The role of the Czech agriculture minister in this is close to zero. Common trade policy is entirely within the competence of the European Union,” he stressed. Egg prices, he added, are falling as poultry flocks recover after bird flu.

The Czech Statistical Office recorded in August a year-on-year drop of 23.7 percent in pork prices, 5.2 percent in cheese and 38.8 percent in butter.

The role of retail chains

The Food Chamber also speaks of a combination of domestic and foreign factors. “End prices of food primarily reflect the broader economic reality, in particular supply and demand on the European market and the costs of the entire supply chain,” said the chamber's spokesman Marek Zemánek.

Source: novinky.cz