The shopping basket contracts at reduced prices without reflecting skyrocketing food inflation.
Food prices rose at the highest rate since recorded in October. On average, it rose 15.4%, a record level since this basic component of family spending began to be counted in 1994. A fact that hides an even more significant growth. For example, according to data published by the National Statistics Institute (INE) on Tuesday, sugar prices have increased by more than 27% last month and more than 42% so far this year.
Inflation eased to 7.3% in October due to decline in electricity and gas
Oil takes up about 60% and butter, 34%. But it’s not just processed foods. Prices for fresh or refrigerated vegetables, a staple in any shopping cart, have risen more than 25% over the past year. equal percentages of milk (whole or skimmed) and eggs; And that touch pasta or yogurts.
In this context of increasing food prices, for the moment, an agreement on basic prices on the shopping basket was demanded, which was demanded by the Second Vice President and Minister of Labor and Social Economy, Yolanda Díaz, in an interview with elDiario in early September. es
The door opened for new meetings
Afterwards, Díaz and Minister of Consumption Alberto Garzon met with representatives of the main super and hypermarket associations. His aim, “to determine a basket of basic products, about 20 or 30 products, in which we have done with gas and other materials, we cap the prices. 20 or 30 products that are basic: milk, bread, eggs, fruits…”, the vice president listed in the above interview.
After that meeting, technical meetings have been held, according to executives and sources at the distribution companies, but, at this point, the basic basket of household income reduction has not been determined.
An option that has not been ruled out. Sources in the Ministry of Labor and Social Economy have opened the door to new meetings with distribution companies in an environment similar to the current one, where food prices have not taken a breather, as is the case with the overall CPI.
Diaz declared on Tuesday that “Today’s CPI data is very important, it indicates that when the government acts like we did with energy prices, prices go down. There are two areas where we have not taken action. One of them is food and they don’t just drop, they shoot, they are at 15.4%. Along with the house, this is the real problem of our country. I repeat that the profits of the big distributors are increasing like never before. I ask that you act now. When we do not act, we put many families at risk. I once again ask the big distributors to take immediate action, as they are increasing their profits.”
The cost of this purchase was also mentioned in the press conference of the Council of Ministers on Tuesday. The First Vice-President and Minister of Economic Affairs, Nadia Calvino, denied that a specific tax was on the government’s table for hypermarkets and supermarket chains, as proposed in Portugal. Also, he also expressed confidence that fresh food grain inflation will start to come down in the coming months.
Future relief from core inflation
It is true that the initial impulse [de la inflación] This is given by energy prices but this motivation has been replaced by food price increases, especially processed and industrial prices”, assumed Calvino in a press conference after the ministerial conference. “I hope we will see the underlying inflation that is behind energy prices begin to moderate in the coming months. We have already reduced special tax rates in this sector.”
In the latter case, one of the demands of the distributors is to reduce the tax on food, reduce or suppress VAT. However, experts question the effectiveness of this measure, as it does not affect the price and is charged to public accounts.
As for the option of taking more measures to reduce food prices, for now, Calvino has not explored that direction. “The most important thing to combat this situation is to support household incomes, to continue the policy of strengthening incomes, as we have been doing since inflation; Job creation, improvement in salary status, helping to relieve the situation of families affected by rising mortgages”, he listed. “Measures to support the most vulnerable, who may be most affected by rising food prices.”
On what is behind this increase in basic food items, sources in the distribution sector assured that it is a matter of cost, with companies increasing basic prices. In particular, they confirm that there are suppliers who have increased prices five times so far this year and after the implementation of the chain law – which prohibits selling at a loss – they will have to affect this increase.
In some products, such as sugar, the price increase is not local but an input that is becoming more expensive globally and where they do not appear to be abating in the near future, because of shortages in the international market. .
As for the growth itself, there are vegetables like zucchini that have tripled their original price – the growers have been paid for a year. And there are other products that, in this first link, are also increasing above the average food inflation, for example, pork or eggs, which are more than 60%.
However, there are some such as extra virgin olive oil that have become almost 60% more expensive at the end of the chain, in the CPI paid by consumers, but the original, producers are being paid 30% more than a year ago. , according to calculations published by the Coordinator of the Organization of Farmers and Ranchers (COAG). At the end of October, there are also fruits for which less money is paid than in autumn 2021. For example, table grapes, which are sold to farmers at 0.74 euros/kg, when at the end of October 2021 0.77 euros.
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