Food market leaders are not ready to engage in competition battle to reduce prices / day

He said that in Latvia more than half of inflation is made up of food. « There is something systematic for food, which prices are driving more than we expected it last year, » said Rutkaste.

There are products that follow prices for global food price trends, but, as Rutkaste pointed out, « here is definitely not the story that external prices are rising, there is something more. »

He explained that usually, comparing the prices of food producers and consumer prices, they follow each other – which means that one prices are rising, the other follows, one decreases, the other follows. So far, Latvia has been similar, but at the moment the price increase has been led, which means that final consumption prices are rising faster than producer prices.

Rutkaste pointed out that it was somehow related to the Latvian pricing mechanism, and the ability of traders to increase prices is higher than that would be more stringent in competition.

« It seems to me that competition could be fiercer in one other segment, which would largely lead food inflation closer to what is determined by the costs, » said the head of the Bank of Latvia’s Monetary Policy Department.

Rutkaste mentioned that the Ministry of Economics (EM) has begun various initiatives that are aimed at increasing the transparency of pricing for a specific food basket, regular price publication and the creation of a calculator.

« It seems to me an adequate way to react to this. We can’t say that there is a monopoly or there are few companies there. This is not the market leaders who do not want to engage with each other in a bloody competition, and as they priced, others try to follow. The buyer should also be more active, follow up and may not be supported by trader chains, where prices are rising fastest.

Mārtiņš Kazaks, Governor of the Bank of Latvia, also emphasized that food in Latvia is concerned about food.

« We have caught this problem quite early, so I think there is a big chance not to be allowed and not about chronic ailments, » said Kazak. He stressed that the Bank of Latvia on this issue is definitely ready to help with the analysis, but the main task is competition and transparency.

It has already been reported that the Bank of Latvia has increased the annual average inflation forecast for this year from previously projected 1.4% to 3.4%. It was determined faster than previously predicted, food and service prices rise.