From the beginning of next year, food prices cannot be expected to fall, when energy prices are expected to rise. Therefore, the reduction of the value added tax (VAT) by three percent cannot take effect. Dana Večeřová, president of the Food Chamber of the Czech Republic, said this on Czech television in today’s program Otázky Václav Moravec. Minister of Agriculture Marek Výborný (KDU-ČSL) said that, on the contrary, he sees no reason why food prices should rise. According to him, companies should stop making excuses about energy prices, because they have reached the EU average.
Večeřová said that the recent drop in food prices was mainly due to the functioning of the market, not government pressure, which both Výborný and Prime Minister Petr Fiala (ODS) spoke about several times. On the contrary, rising costs led to the increase in prices, she added. Therefore, in a situation where, according to the latest information, energy prices for companies are expected to rise significantly, food prices cannot be counted on to decrease, she added.
The president of the Trade and Tourism Association (SOCR), Tomáš Prouza, noted in the same program that if there is still a great demand for cheaper food, traders must reach for imported goods. “And any increase in the price of energy will lead to an increase in food prices,” he added. He also pointed out that the further possible increase in costs will put food companies at a great disadvantage against foreign countries. The government’s consolidation package also brings higher income tax, changing employment rules to agreements and other changes, he added.
According to the government’s consolidation package, VAT on food is to be reduced from the current 15 to 12 percent from January. However, Prouza previously pointed out that the consolidation package will move soft drinks to the basic 21 percent rate from the current 15 percent rate.
In the program, Večeřová once again criticized the comparison of food prices in Germany and the Czech Republic, which was presented by Prime Minister Fiala in his recent video. In Germany, VAT on food is seven percent, and Poland reduced the rate to zero until the end of this year. This leads to long-term purchases by Czechs abroad, she added.
The Energy Regulatory Office (ERÚ) recently announced that it proposes a year-on-year increase in the regulated component of electricity by 71 percent for households and by roughly 39 percent for gas, and the increase should be even more significant for large customers. Business organizations do not like the proposal and, according to the opposition, the situation is a failure of the government. However, Prime Minister Petr Fiala (ODS) stated that final energy prices next year will rise by a maximum of one percent compared to this year. The final form of the regulated energy component will be clear at the end of November.
Výbrýn said today that the situation in energy prices for large customers will still be discussed. He also stated that on December 4 he is to meet for another meeting with representatives of the retail chains.
The price of energy consists of a commercial component, which is determined by suppliers, and a regulated part, which is managed by the state. Next year, the regulated component of electricity should make up about 40 percent of the final price for households, while its share is around 20 percent for gas.
Tags: Food prices decrease price energy rises warns president Food Chamber News
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