We analyzed food prices: 44 percent higher and continuing to grow

Food prices in Montenegro as of July 2019, according to Monstat data, are 44 percent higher and continue to rise. Traders blame importers and the increase in costs for this, although according to tax returns, their income and profit are also growing significantly.

In March of this year, the government, in cooperation with retail chains, launched the "Stop Inflation" campaign, during which the prices of some brands were reduced, but it was short-lived and prices continued to rise already in April.

The Ministry of Economic Development and Tourism, which includes the sub-department of trade, did not respond to the question of "Vijesti" whether they monitor price growth in retail stores, whether they are concerned about the continuation of inflation, and whether they plan to continue the "stop inflation" action or adopt some other measures to stop or limit price growth. They did not even answer the question whether the price increase is due to the so-called "import inflation" or the high margins of importers, wholesalers and retailers.

There is no scientific research on inflation

In Montenegro, no one seriously investigated the causes of inflation, in contrast to Croatia, whose National Bank determined in a scientific study that the main reason for inflation is the increase in the margins of importers and traders in the desire to increase profits. The Central Bank of Montenegro made a "Diagnostic analysis of inflation", in which they stated that inflation in Montenegro is under the dominant influence of global factors, primarily the rise in food and oil prices on the international market, but without clear mathematical proof of such a claim.

That this statement by the CBCG is not correct is also shown by the data of Monstat, that in every month there was an increase in monthly inflation, except for a short time in March, even though during the past two years the prices of fuel, as well as the stock market prices of cereals, oilseeds and other goods, have fallen significantly. without affecting the prices in Montenegrin markets.

Also, prices did not fall even when the government halved the amount of excise duty on fuel, and abolished or reduced VAT on basic foodstuffs.

The market in Montenegro is free and the Government has no legal ability to limit prices, although competition is very limited to order from food importers, where one company can represent almost all brands of one type of product.

Two years ago, the government at that time made a decision to freeze the price of basic white bread at 50 cents, and it lasted for five months. However, that decision was illegal and this year the Government had to "get even" with the bakers by paying them compensation of 300 euros.

Importers and traders are making profits

According to financial reports, the net profit of large importers and retail chains in 2022 was two to three times higher than in the pre-crisis year of 2019. For this reason, the government proposed the so-called joint profit tax, according to which companies that had a significant increase in profits would pay tax at significantly higher rates. However, due to the blockade of the assembly and the public campaign of some employers, that law was not passed.

Minister of Finance Aleksandar Damjanović yesterday in "Boja jutra" TV Vijesti said that the price of fuel affects the price of retail commodity services, but that this "cannot be an alibi for anyone, not even the Montenegrin oligarchs, the owners of retail chains, that they have the highest margins in Europe, which is a notorious fact".

He says that even when we had a reduction in excise duty on fuel, we did not have an adequate response from the economy and retail chains, they did not reduce the prices of their products.

"The enormous margins and profits that can be seen in the balance sheets show that the revenues of the retail chains that hold 85 percent of the market in Montenegro have never been higher. We all expect Lidl, because where Lidl comes, prices will be 15-30 percent lower at the start," said Damjanović.

170 euros is now a higher minimum consumer basket for a family of four than it was in July 2019

More expensive than most in the region

Analysis of the prices of food products from the websites of retail chains in Montenegro and the region shows that the prices of most products are significantly higher in Montenegro than in Serbia and Bosnia and Herzegovina, while they are equal or slightly higher than in Croatia.

According to Monstat's data on domestic agricultural production, it can be concluded that Montenegro covers only about 15 percent of its food needs from domestic sources, so it is significantly dependent on imports. The prices of imported products cannot be lower than the country from which they are imported, but they should not be several times higher either.

The prices of cereals and oilseeds on international exchanges have returned to the level of two years ago. The prices of flour and oil in Montenegro are a little lower than a year and a half ago when they reached record values.

The price of fuel cannot be an alibi for anyone, not even the Montenegrin oligarchs, the owners of retail chains, that they have the highest margins in Europe, which is a notorious fact, said Minister Aleksandar Damjanović.

Fuel prices will rise again

Fuel prices could be higher again from Monday, the 11th time since the beginning of the year.

Since the previous adjustment of retail fuel prices in Montenegro, ten days ago, there has been a new rise in the prices of oil derivatives on international exchanges. If the current situation were to be maintained until the end of the week, prices would be higher by at least four to five cents.

The Association of Oil Exporting Countries OPEC, dominated by Saudi Arabia, continues to limit the growth of production, which encourages the growth of oil derivatives prices on international exchanges, and thus the profits of their companies.

A few months ago, Saudi Arabia made a decision to divert ten billion dollars from the profit from the sale of oil to finance sports in that country, especially football, in order to improve the country's rating.

The price increases hit pensioners the most

The average net salary in Montenegro in July 2019 was 511 euros, while now in July it was worth 797 euros, which is an increase of 55 percent.

For that same period, food prices, according to Monstat, have increased by 44 percent, that is, most of the growth in those earnings has been devalued in the meantime.

For the same period, the average pension increased by 41 percent, from 288 to 406 euros. This percentage increase was mostly due to the increase of the minimum pension from 145 to 280 euros, that is, by 94 percent. Other pensions were increased through regular adjustments by about 25 percent, that is, significantly lower than the increase in food prices. So this rise in prices most threatened the oldest population, who mostly use their modest incomes to buy groceries.

Monstat's consumer basket increased from 2019 to 646 euros from July 818 to June of this year, i.e. a family of four needs 170 euros more than three years ago to survive.

"Lidl" will not talk about the start of work yet

The international retail chain "Lidl" has so far bought three locations in Montenegro for its future megamarkets, but the company does not want to talk in detail about its plans and when its first sales centers will be opened.

"Lidl is constantly looking at potential targets for expansion. In terms of retail, Montenegro is a market where Lidl's concept of offering high quality products at affordable prices meets the needs of consumers. That is why Lidl is investing in potential locations for stores or a logistics center in this country. We kindly ask for your understanding that at this moment we cannot comment on the scope of our activities, potential locations or potential opening dates", the company announced to "Vijesta".