Romanian government extends cap on food mark-ups for two months

Restrictions on commercial mark-ups to various essential foods were extended, as this measure has curbed speculative price increases, contributed to reducing inflation, and safeguarded the population’s purchasing power, Prime Minister Marcel Ciolacu said on Wednesday.

According to data from the National Institute of Statistics, prices in December 2023 were 5.8% higher than in December 2022.

Before introducing this measure in June 2023, the difference compared to the same month the previous year was almost 18%.

“Without capping, prices would have increased by 20%”, Ciolacu said.

Ciolacu said he would continue a dialogue with major retail chains to establish a “long-term system based on a state-business environment partnership to control prices”.

Additionally, Agriculture Minister Florin Barbu has said that the measure did not adversely affect Romanian producers or lead to disruptions or shortages in the food market. Additionally, those who initially criticised the approach now support extending the measure.

The list of products with capped prices has also been slightly modified.

Barbu also announced the creation of a price management and monitoring mechanism involving retailers and processors. If significant price increases are observed for delisted foods, the government will promptly intervene with another regulatory measure to limit commercial additives.

Despite the government’s optimism, analysts are sceptical about the measure’s success.

Economic analyst Dragoș Cabat told Economedia that the measure primarily targeted the vulnerable population and had limited impact on reducing inflation, “with a potential 90% propagandistic purpose and only 10% macroeconomic effect to stabilise inflation”.

Economics professor Cristian Păun distrusted the National Institute of Statistics (INS) data, criticising the lack of transparent communication and calling for a government analysis to justify the extension of the measure.

The Federation of Employers in the Food Industry – Romalimenta and the National Association of Small and Medium-sized Traders in Romania – “categorically” opposed the continued capping of commercial mark-ups for essential foods, stating that the extension does not benefit either the food industry or the consumer.

(Sebastian Rotaru | Euractiv.ro)

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