Food summit – high prices needed, “otherwise grocers risk perishing”

Vice Chancellor Werner Kogler, Social Affairs Minister Johannes Rauch (both Green) and Agriculture Minister Norbert Totschnig (ÖVP) spoke with experts and retail representatives at a food summit on Monday to ease ongoing price pressure on Austrians. The “20 to 30 cheapest products” must now be highlighted on websites and in supermarkets and be permanently updated, the director of the trade association Rainer Will explained after the meeting.

Nevertheless, “the big levers” of politics are needed. Since the prices are mainly due to the high energy prices and their consequences. “Our profit margins are between one and two percent.” The prices are necessary, “otherwise there is a risk that grocers will die out.” Finance Minister Magnus Brunner’s “French model” was rejected. There, the big food companies could be persuaded to forego a quarter of price increases. The price reduction would be “irrelevant to consumers” as costs would be redistributed to other areas.

Kogler relies on “price transparency”
Vice Chancellor Kogler explained that it was nevertheless “agreed not to raise the prices of key foods for the time being”. “In exceptional cases” they could even fall. An immediate VAT reduction is not in sight. “Experts have completely different opinions here.” If yes, then only about “basic nutrition”. Full “price transparency” needs to be worked on. In this way, “price transparency” should be improved, explains Minister Rauch of Social Affairs.

Trade defends prices
Will argued similarly on Sunday night’s ORF “ZiB2,” dismissing any blame for inflation on his industry: “The competition is perfect.” The food market in Austria is almost entirely run by the four major chains Rewe, Spar, Hofer and Lidl, but none of these retailers can raise their prices because they would otherwise lose customers.

Cause and effect are confused with inflation, Will said. “The causes are the skyrocketing energy costs, the rent increase and personnel costs, but also the financing costs of the banks.”

The government only supported industry and did not support trade. However, food prices in Austria have risen the least compared to the EU. But it is also true that the amount on Austrian receipts has been higher than in many other countries for years – and the gap is widening. Current figures show that the average price level in Germany is already more than seven percent below that in Germany (see graph).

“At the checkout of the supermarket, while shopping, people notice that somehow it never works out,” said Minister Rauch of Social Affairs recently. A self-experiment by the minister also showed blatant price differences compared to its neighbours. Rauch paid seven euros more for the same products in Austria than an acquaintance in Germany.

Austrians melt away money
In the run-up to the food summit, institutions such as the Workers’ Chamber and aid organizations such as Caritas sounded the alarm. About nine out of ten ‘materially and socially disadvantaged people’ could no longer afford ‘regular leisure activities’ (see graph).

According to the Labor Chamber, the price of selected individual products has recently doubled or in extreme cases even increased fivefold, mainly because the particularly cheap offers from the previous year are no longer available. The exorbitantly higher domestic prices have so far been attributed by the food industry to higher energy prices.

Compared to Germany, Austria is also a smaller market and therefore purchasing is more expensive. In addition, the VAT for basic foodstuffs is 7 percent in Germany and 10 percent in Austria. 1.5 million people are affected or at risk of poverty.