Eurostat statisticians have recently focused on food prices in the EU. Over the past year, food prices have risen the most in Hungary, by as much as 34 percent. Croatia ranks eighth with a price increase of 19.8 percent, with Lithuania, Latvia, Bulgaria, Estonia, Slovakia, and the Czech Republic also in between.
A first glance at the statistics shows that the biggest victims of food inflation are the new EU member states, the countries of transitional Europe. Romania and Poland are immediately after Croatia, and only Slovenia (14.2 percent) is slightly better than the EU average (14.3 percent). On the other hand, in 25 individual food categories, there are almost no countries from the old European Union among the ten with the highest food price increases. Such a distribution is all the more dangerous and further stratifies the rich from the poor, who spend a significantly larger share of their income on food.
For example, in Croatia, food and non-alcoholic beverages account for more than 25 percent of total expenses. When housing (including electricity, gas, and other fuels), which takes up almost 17 percent of income, and transportation (15 percent) are added, it is clear that the average Croatian citizen feels significantly higher inflation than the official 12.3 percent recorded in August. The same applies to other lower-standard countries.
Freezing Prices Does Not Help
However, why does food increase the most for the poor? And how is it that Hungary, located in the fertile Pannonian plain, leads the list? The surprise is even greater because Orbán has frozen the prices of basic food products since February, but he has not managed to curb inflation, even in that segment. On the other hand, residents of border areas in Croatia still find it worthwhile to shop in Hungary, even though Plenković has frozen some prices and Croatia is among the countries with significant agricultural potential and a strong food industry.
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As far as Croatia is concerned, it ranks among the countries with the highest price increases in most of the 25 categories, and it is at the top in one category. Wine prices have risen by 15.3 percent (the EU average is 5.2 percent, and the lowest price increase was in Luxembourg – 1.8 percent). The exception is vegetable prices, which have increased at the EU average level (10.7 percent), as well as pork, beer, and fruit (below average), and olive oil, which has increased by 3.7 percent, just 0.6 percentage points higher than the well-known olive oil producer, Austria, which had the lowest price increase.
In comparison of food items with the overall price increase, in Croatia, only the price increase of pork (10.9 percent), vegetables (10.7 percent), beer (5.1 percent), olive oil (3.7 percent), and fruit (three percent) are below the inflation rate of 12.3 percent.
In August, food in the EU was on average 14.3 percent more expensive than a year ago. And this is not bad news at the continental level. Namely, the Union exports more food than it imports. In the first five months, the 27 countries exported food worth 89 billion euros and imported for 67 billion, resulting in an EU foreign trade balance of about 22 billion euros. Therefore, the increase in food prices, which is significantly higher than inflation (which was 5.9 percent in August), leaves a surplus of money in the budgets of EU countries. Of course, this does not apply to Croatia. Last year, we imported food worth 27.3 billion kuna and exported only 20.6 billion, resulting in a trade deficit of 6.7 billion. In this, a relatively bright spot is primary production: agriculture recorded a foreign trade surplus of 2.3 billion kuna, but the food industry, with exports of 12.4 billion kuna, could not compensate for imports of as much as 21.5 billion.
Foreigners Dictate Prices
Most of this import is placed on the Croatian market through retail chains. The import of just the ten largest food traders last year amounted to 7.8 billion kuna, with most of it being food. So, knowing that eight of those ten chains are part of the operations of large international companies (we must get used to the fact that even the largest, Konzum plus, is no longer domestically owned), it is clear that they dictate prices in the market. And for them, as well as for their parent countries, which are major food exporters, the increase in food prices is beneficial.
It can be said that today food is not a weapon only in the context of ships full of Ukrainian wheat destined for Africa that are stopped in Black Sea ports. This story about prices shows that food can be a weapon in a more sophisticated way, even though the use of that weapon is not prescribed anywhere nor has anyone formally decided to use it. It is not nuclear weaponry, but the order on the European continent can change without war. However, unlike Africa, transitional countries will not starve due to the use of that weapon. Although the idea of a ‘two-speed’ Europe has never been realized, warnings over ten years old about a ‘two-speed’ economy dominated by export economies of the powerful old northwest of Europe and the lagging new transitional southeast are being fulfilled in the shadow of the war in the neighborhood.
