According to Latvian Food Retailers Association (LPTA), the food retailers supply chain reaches from the field all the way to store shelves. Requests to increase prices continue. But retailers refuse, according to information from members of this association.
Although the prices of energy resources and raw materials have gone down when compared with the months that were the toughest inflation-wise, nearly 90% of suppliers and processing companies are not too eager to request price drops.
Various stores use different discount programmes, which helps slow down the price climb a little. This also helped promote at least a slight price drop in June, when compared with May. To make prices go down faster, they have to go down across the entire supply chain – from the countryside to the store shelves.
Efforts from retailers are not enough to change things, LPTA stresses.
In most cases producers, processors and suppliers ask prices to be increased in the amplitude between 5% to 25%, justifying requests with production, delivery, raw material, packaging material and workforce cost increase. There are relatively fewer producers ready to reduce prices – only every tenth.
“Retailers have done a lot to reduce prices. They have improved their energy efficiency and have spent their own funds to absorb much of the price surge on various goods.
We would like to see more goodwill from producers:
in May, for example, when everyone was expecting a price drop, suppliers still turned to LPTA members with requests to raise prices, not reduce. Among our members are also those who have not received a single request to reduce prices from any of their suppliers,” says LPTA executive director Noris Krūzītis.
Many producers, processors and suppliers that had increased prices during a crisis are not in a hurry to reduce them. This is possible because those goods were produced when resource prices were high, and they still needs to sell out stock. Elsewhere in Europe there is a tendency observed when prices of goods originally produced at high prices are reduced to sell out remaining stock. It is possible that products produced elsewhere may end up in Baltic States and Latvia, speeding up the price decline in general, LPTA predicts.
Also read: Average consumer price level up by 7.9% in Latvia in June