The powerless prime minister among the shelves, or How Petr Fiala gets to know the peculiarity of the Czech retail industry

Prime Minister Petr Fiala went to supermarkets on the Czech-Bavarian border and discovered that you can make better and cheaper purchases in Germany than on the other side of the border. At the same time, the Prime Minister assured the public that his cabinet will continue with similar controls and that he will want to hear from manufacturers and international companies a public explanation as to why the same goods are sold on each side of the border at a different price per basic unit of measurement. However, no breakthrough will occur. I am afraid that Petr Fiala – if he gets an answer – will hear the same thing that has been repeated for many years. They will also see for themselves how manufacturers and sellers are completely on the hook for control purchases or similar politically motivated PR events. And not only them, but also the politicians themselves, including the prime minister. Apparently, the only thing that will bring producers and traders to their senses is and will be the outflow of customers and the reduction of any state support and subsidies.

Checking the quality and prices of food in domestic stores is nothing new in the Czech political pond. It was also done by the representatives of the previous ruling parties, and some political forces included it in their election programs.

Even then (as now) it revolved around the fact that goods are more expensive in the Czech Republic than abroad, are of lower quality, and in a number of products are poorer in terms of the content of the basic product component. A thousand times have been talked and written about fish fingers with less meat, Nutella with less cocoa, ketchup with more apples than tomatoes and so on… The result was a reaction from interested parties saying that every market is specific and that manufacturers and traders meet the demands and preferences of their customers. It always ends with this proclamation and we move on.

In reality, even the actions of Prime Minister Petr Fiala will probably be lost. Traders or food producers will politely listen to the Prime Minister, answer and maybe even promise him something. However, nothing will change as a result. They will keep stuffing the same things on the shelves and in their consumers, and with the prices they will bewitch as they please. From time to time, they make a smokescreen, where they insult each other and blame who is responsible for the high prices, and then finally find out that the prices are actually fine, because the rising costs of energy, transport and wages need to be included in them.

This time, however, this action will not be without consequences. I mean the political ones. Petr Fiala is a big figure and a strong political player. He has now entered an uncertain ring and the public and the opposition will now be watching to see how he succeeds with his event. Some people applaud the prime minister for his efforts, but that’s where the list of plus points ends. I am afraid that with this act the prime minister has run into a pitchfork. He showed how big a problem expensive food is, but at the same time it must be clear to him that there is absolutely nothing he can do about it. His political predecessors also came to the same conclusion, pointing to a similar matter repeatedly. In addition, the Prime Minister will earn the ridicule of the opposition and his opponents, who will point to his naivety and spontaneity with which he filmed his shopping video.

But that doesn’t change the fact that food and other products in retail are expensive and people don’t smell it. Evidence of this is the decline in retail sales, which has lasted for seventeen months. In short, people have taken a back seat and cannot tolerate high and inadequately inflated prices anymore. If they can, they go shopping in Poland and Germany. Once a festive event, now a weekly routine. Now is also the time to buy this year’s harvest. Potatoes, apples, nuts, garlic, onions and other vegetables. Farmers have already learned to sell it directly to people outside of retail chains. This will benefit both them and the shoppers. Farmers will earn more, people will save. They are not going to feed the business shimmy.

In short, the retail and food industries now resemble a vicious circle. When you look at it from a different perspective, you have to say that something is not right here. Store sales are down for seventeen straight months and nothing is happening. Stores don’t go bankrupt and don’t get laid off. The same is true of the vast majority of food companies. All entities appear to be in good financial health. Either they improved it during the covid, when in addition to creeping and permanent price increases they consistently used all state aid, or they are masters at using various subsidies and subsidies from the government or the EU budget. So they don’t really mind lower sales for goods.

But nothing is infinite. If the retail and grocery markets are to stabilize, it will only happen thanks to the continued outflow of customers and declining sales. And also through the reduction of all non-entitlement subsidies for producers. The state cannot and should not enter into pricing, that is a free market environment. Price ceilings are the road to hell, but coordinated consumer pressure and a subsidy diet from the state and funds is a great force that sooner or later should manifest itself. And it will certainly be more effective than Prime Minister Petr Fiala’s control purchases.