The “waterbed” effect after capping the commercial addition to staple foods. Chirițoiu: Retailers have raised other prices and are earning as before

​​”If you sit on the water mattress, it sags on one side and rises on another. It is what in economics is called the ‘waterbed effect'”, said Bogdan Chirițoiu, the president of the Competition Council, on Tuesday. He admits that retailers have increased the prices of other products to compensate for the limitation of the commercial addition to basic foods, introduced by the Ciolacu Government.

Shopping in the supermarketPhoto: Radub85 / Dreamstime.com

Chirițoiu: Retailers’ profits are preserved. People who buy basic products are at an advantage

The President of the Competition Council made these clarifications when asked by journalists if he noticed price increases for other products, perhaps non-food, during this period when the Government limited the commercial addition to certain basic foods.

  • “Yes, we have indeed seen that during the period when the prices of basic products fall, you see increases in other products. Somewhere the commercial margin, retailers’ earnings are preserved. Earn less on core products and a bit more on other products.
  • People who buy basic products are somehow advantaged and those who buy other types of products, more expensive, pay a little more”, said the president of the competition authority on Tuesday.

When asked which products exactly did the Competition Council observe price increases, Chirițoiu said that the authority looked at “everything that the big retailers sell, so also non-food, non-alimentary”.

  • “We looked at the whole package, how the margins evolved.
  • In economics it is called the waterbed effect. If you sit on the water mattress, it falls on one side and rises on another.
  • What we’re seeing is margin preservation, meaning that retailers are overall earning as much as they were before. Earn a little less on the cheaper products and more on the others. Overall, they are still around 2% net margin,” he said.

Asked by journalists if this behavior could be anti-competitive, similar to that of an understanding between companies, Chirițoiu rejected this hypothesis.

  • “It is a behavior to adapt to the legislation. We do not see this behavior as a violation of the competition law, but as an adaptation to the conditions of the legislation”, said the president of the Competition Council.

Commercial allowance capped at 17 staple foods. Ciolacu: In the absence of this measure, Romanians would have paid 20% higher prices

The government decided on Wednesday, January 31, to extend for another 2 months the limitation of the commercial addition to 17 basic foods. “Without this measure, Romanians would have paid 20% higher prices for basic foods, on average. In some cases, the prices would have been far above this level, unbearable for the majority of Romanians”, declared Prime Minister Marcel Ciolacu.

The Prime Minister said that the extension of this mechanism is necessary especially for those with low incomes.

  • “At the same time, we will build together with the big store chains, as we have established, a long-term predictable mechanism. We want to keep prices under control, and Romanian farmers, producers and processors to receive the right reward for their work!”, said Ciolacu.

The new list of foods with capped commercial additions: Out go cozonac, rice, tomato broth, margarine, yeast and minced meat

The new list of foods that will have a capped commercial addition for another 2 months includes 17 foods instead of the previous 21 foods, according to the draft ordinance put up for debate by the Ministry of Agriculture on Tuesday. The cake, rice, tomato broth, margarine, yeast and minced meat were removed from the list, being replaced by butter and butter.

The 17 foods that will have commercial addition capped for another 2 months

1. Plain white bread weighing between 300-500 grams, without specialties

2. Cow’s milk for consumption 1 l, fat 1.5%, except for UHT

3. Telemea bulk cow cheese

4. Plain yogurt from cow’s milk, 3.5% fat, with a maximum weight of 200 grams

5. White wheat flour “000” up to 1 kg

6. Grind up to 1 kg

7. Chicken eggs caliber M

8. Sunflower oil up to 2 l

9. Fresh meat chicken*

* Chicken meat, in the application of this emergency ordinance, means: whole chicken, chicken cutlery, whole chicken legs with bone and chicken wings, the standard version.

10. Fresh pork**

** Pork, in the application of this emergency ordinance, means: processed pork, bone-in and boneless pork leg, pork loin.

11. Fresh vegetables in bulk***

*** Fresh vegetables in bulk, in the application of this emergency ordinance, means: tomatoes, onions, cucumbers, dried beans, carrots, Bianca bell peppers and capsicums, garlic.

12. Fresh fruit in bulk****

**** Fresh fruit in bulk, in the application of this emergency ordinance, means red and golden apples, plums, pears, table grapes.

13. Fresh white potatoes in bulk

14. Cast white sugar up to 1 kg

15. Cream- 12% fat

16. Butter up to 250 grams

17. Magiun up to 350 grams.

SEE THE OUG PROJECT WITH THE NEW FOOD LIST

Photo source: Radub85 / Dreamstime.com

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Barack
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