Food prices are rising and, compared with last year, the rise is above 20%. Prices have continued to climb in recent months, though market researchers had predicted a drop.
A solution is being sought by the Agriculture Ministry. Its offer is to ban the operation of big stores on Sundays. In the minister's assessment, it will encourage more competition for the lowest price on working days and more opportunities for small businesses prepared to work Sundays.
"I recently saw a markup of 300% + VAT for one large producer in Latvia. In fact, 321%. In a product group which is not an expensive product group," said the Minister for Agriculture, Didzis Šmits (United List) at the government meeting.
The Minister has no doubt that the discussions will be extensive, but in his assessment, such a plan could also be supported by the Ministry of Finance.
The current situation is not normal, noted Ingūna Gulbe, lead researcher at the AgroResources and Economic Institute. Everything suggests that prices should fall.
“In my opinion, food prices are declining, but less than they should. And some have even grown,” Gulbe said.
She said sales were declining across Europe. That should cut prices, too. In Latvia, however, there are two main reasons why we are not experiencing price drops. One of them is the lack of competition. The entry of the retailer Lidl helped, but not enough.
Prime Minister Krišjānis Kariņš is skeptical about the intention of the Ministry of Agriculture to close supermarkets on Sundays.
Kariņš told LTV's “Morning Panorama” on June 7 that Latvia shouldn't employ methods similar to those used during the pandemic. At the time, the government sought to reduce the flow of people to limit the distribution of Covid-19 by closing supermarkets on Sundays, but it raised controversy over how to define a supermarket and what goods can or cannot be sold on holidays. Some retailers quickly exploited loopholes in the hastily-introduced rules.
Karins LTV said it would be difficult to define again what is small and what is big, what should open and what should close. “I don't see how this can be done right now,” the Prime Minister said.
In April, retail sales turnover in Latvia decreased by 3.1 percent compared to the relevant month a year ago. It's a steeper drop than the average in the European Union and the eurozone.
Laura Bagātā, representative of the Maxima Latvija supermarket network, said that people in shops are still looking for discount goods, and goods that can be stored longer. Demand for products with discounts for frozen fish, fish products, ice cream, demand for discount vegetables, and dry pantry goods increased by 30%.
In an interview with TV24, Raimonds Okmanis, manager of the Lats grocery store network, said that there are fewer customers but they spend about the same amounts as a year ago, only for fewer goods because they have become more expensive.
Meanwhile, Rimi Latvia spokeswoman Inga Bite said that since the middle of last year, and especially autumn, when heating season was ahead, buyers have become particularly careful. They go to the shop more often now, but they are looking for discounts, and they rarely pick special foods, such as select cheeses or sweets.
She said that a trend has been observed that shoppers plan purchases more carefully, look at what amount they're ready to spend on purchases, and the number of goods in a basket of purchases is declining slightly. It has also been observed that buyers are prepared to allocate a smaller amount per purchase.
As prices rose last year, traders' turnover also grew. For example, owners of the largest chain of shops – Rimi and Maxima – turned over one billion euros in Latvia, but each held about thirty million euros in profits. Earnings figures fell last year.