Author: Klevis Paloka
With unstoppable rates, the prices of basket foods are increasing, directly affecting the citizens. The elderly man, Sarafin Lleshi, walks among the stalls in one of the agro-food markets where, next to the products, the prices are not the same as yesterday.
"They have grown so much that I don't have any money to buy them. We can't meet the conditions for anything, we just come out in vain. The government must find a solution, so as not to leave us to die for bread. In the scene of lek per bread, with a pension of 5000 lek that I have, I can't even make a living, to increase pensions. It's good that I have children abroad, because it is impossible for me to make it", this is how the 80-year-old man begins his story for "Sinjalizo".
The pensioner is able to count one by one, each of the products starting from the main ones such as bread, flour, oil, rice, sugar, etc.
"Bread has increased in price by 20 Lek only today, all vegetables have risen, tomato has increased in price by 20 Lek more, potato by 20 Lek more, cucumber by 10 Lek more, spinach by 20 Lek more, apples by 30 Lek more. Groceries are up. Oil, flour, rice, sugar", remembers the pensioner, who goes around hoping that he will find somewhere a little cheaper. But because food prices have increased, Sarafin Lleshi is forced to return home empty-handed, convinced that maybe some price will drop.
Hasan Stafa, who heads the Consumer Protection office, repeats that the "madness" of prices started on February 22, jumping up to 25%.
"The increase started two days before the invasion of Ukraine began. Flour for mass bread in the majority points on March 1 was sold for 7600-8000-10000 ALL quintal, while on March 8, 1 quintal is sold for 8000-8400-10000 ALL quintal. The price of bread from March 1 to March 8 has increased by 10-20 Lek for 1 loaf of 720-800 grams. Edible oil has increased by 20% from 210 lek on March 1 to 250-280-310 for 1 liter. Rice has increased by 25% within 1 week. Milk and eggs have increased by 10%. Fruits and vegetables have increased by 5-10%. The prices with the highest increase are in the region of Tirana, Durrës, Vlora and Dibër", says Staff for "Signalizo".
Trying to understand what happened to the basket of food, the director of the "Albanian Consumer" center, Ersida Teliti, has another alibi for a crisis that, according to her, started earlier.
"The increase in the prices of the basket started earlier, before the Ukraine-Russia conflict actually started, but which had the main impact at the moment this war started. Prices have increased since earlier, we recall here the increase in the price of bread in the summer period, August-September, where we addressed a letter to the competition authority. The increase in hydrocarbon prices will directly affect the increase in all prices, including the prices of the basket, since it will be through the means of transport and the citizens will bear the biggest costs.", says Teliti for "Signalizo".
Prices in the sky, no one interferes
The latest report published by the Institute of Statistics in the report of the monthly index for consumer prices shows the increase in the prices of basket products, but also of other categories.
"Within the food group, the prices of the subgroup "vegetables including potatoes" increased by 16,4%, followed by the subgroups "oils and fats" by 10,1%, "fruits" by 7,0%, "bread and cereals" by 6,8%, "sugar, jam, honey, chocolate and sweets" with 6,7%, "meat" with 3,9%, "milk, cheese and eggs" with 3,3%, etc., it is emphasized in report.
Everyone was affected, but especially the needy strata
According to the director of the "Albanian Consumer" center, not only citizens in need are assessed as the most affected by price increases.
"So the so-called needy layers, including customers who are not only from those who receive economic assistance, not only people who have no income, not only marginalized communities, but also family women or people who are on minimalist pensions under the salary average, which will be directly affected by the increase in prices in every aspect of life. Almost the majority of the middle class will be affected by these, because practically in their family budget at the end of the month there will be more expenses than income.a", says Teliti.
Also, the expert calls the reasons why this trend happened as abusive.
"The justification that the increase in prices is being influenced by the war is somewhat inaccurate or abusive in the conditions when we should have a price increase that will be affected a little later, after being discussed by many traders and businesses in their warehouses or in their warehouses there are still products that were bought before the start of the war. Which means, they are bought at a lower cost and the increase is often unjustified. In general, in the framework of economic theory, in order to have an increase in prices, we must have a provision of Services, we must have greater quality or even variety in Services, as well as the increase in prices in such emergency conditions occurs in those cases when they really directly affect of these situations, force majeure such as war", says director Teliti.
Even according to the economy expert, Klodian Muço, the reason why the needy and middle classes will feel more is related to the expenses that occupy the highest percentage of income.
"Albanians are suffering from price increases in the basket, because almost 40% of the budget of a typical Albanian average family goes to food, that is, to food products and to non-alcoholic beverages, so it has a large weight. While an average family in the European Union this is only 18%, so for Albanian citizens it is a very heavy burden and the more these prices are increasing, the more the level of poverty in Albania is increasing", Muço emphasizes for "Sinjalizo".
So the former finance minister, Arben Malaj, adds that in addition to the increase in prices, the reason for the increase in poverty is also the high inflation.
"High inflation affects the increase in poverty. We have to keep in mind that inflation is a tax that hits harder on those with lower incomes. This tax operates automatically, without a legal act, but directly through the increase in the prices of goods and Services. According to World Bank studies, in our case based on the structure of the family budget, the poor and those close to the critical poverty line are at high levels. The risk is high that high prices in their chain effect will hit more individuals and families in need of social support", argues the former Malay minister.
On the other hand, the Bank of Albania notes that inflation for the month of February 2022 reached 3.9%, while a year ago it was only 1.1%.
Why is price speculation not supervised?
According to Mrs. Teliti, the main authority that should monitor the competition is the Competition Authority. The expert says that the organization she leads has reacted by complaining about the increase in the price of the basket.
"Regarding the prices, we have discussed with the main institutions, here we can regularly mention the complaints addressed to the Competition Authority, the last of which was sent on March 5, but also other complaints that we addressed to other institutions. The approach is who is the responsible institution and who is billed for this, so we must have an interplay through this institution, through the Ministry of Finance, also in the meantime between the tax investigation and taxes, in the case when it is established that they abuse the prices and these prices do not declare. In all other cases, the institutions find it very difficult, referring to the competences, to intervene. Currently the best response should be from the Competition Authority, which should conduct an investigation as indeed, the main focus and function is the protection of free and fair and just competition. In the end, precisely a free and fair competition in the conditions where we do not have a monopoly or an oligopoly situation or the dominant position in the market is not abused, in the end it is precisely the consumer who must be protected, where the price is really set according to the rules on the basis of demand - tenderers, so we hope that these institutions or even other institutions involved in direct or indirect processes can act", says Teliti.
But when asked by "Sinjalizo", the Chairman of the Commission of the Competition Authority distanced himself from the powers.
"We are guardians of competition between businesses. We are neither price regulators, nor food quality inspectors, nor the government. There is no legal possibility for the Competition Authority to open an investigation into the prices of basket products. The government deals with these, not us as an independent institution, with a unique focus on competition", said in a reaction to "Sinjalizo", Denar Biba.
Even though the chairman Biba insisted strongly on the fact that it is not the competence of the Competition Authority, on Friday, March 11, this institution announced that it has started monitoring the subjects operating in the market of basket products.
"Meanwhile, the Competition Authority, pursuant to Article 28 of Law no. 9121/2003 "On the protection of competition", prompted by the information and concerns received from the media about the immediate increase in prices for basket products, through Order no. 190, dated 11.03.2022, and Order No. 192, dated 11.03.2022, has immediately placed under monitoring the entities that operate in the market of vegetable oil, flour, eggs, rice and sugar products", it is stated in the announcement Competition Authority.
Ironic is the fact that this authority is recalled after almost 3 weeks to place under monitoring the entities that increased the prices of basket products.
"Sinjalizo" was also interested in the Consumer Protection Commission, an institution under the Ministry of Finance and Economy that deals with consumer protection.
"At the Consumer Protection Commission, there are no complaints about the prices of basket foods from consumers. If a consumer complaint had been submitted to the KMK, we would delegate it to the relevant ministry", says Klotilda Neziri, senior official of this Commission, for "Sinjalizo".
So "Sinjalizo" also requested a response from the Ministry of Finance and Economy regarding the increase in the price of basket products, but until the publication of this article, it did not receive any response.
But what can be done to prevent further price increases?
The expert on the economy, Klodian Muço, suggests the establishment of a task force to monitor the process of price progress and that a decision the government could make to help the citizens is for the moment the suspension of some strategic investments.
"The first aspect I would suggest is to set up a task force or a working group to deal precisely with the process of monitoring the progress of prices in the market, North Macedonia has done, a country in the region. Practically, what should this working group do, it will look, let's assume that company x bought wheat and sell this wheat for example for 120 lek/kg, it will be monitored how much it bought this wheat, at what price it was cleared, let's assume with 90 ALL/kg and what should be the profit margin 4-6%, what is the profit margin? 20%, here there is an abuse on the part of the merchant, or that the merchant changed the price even though he did not buy additional goods, this could be a solution. When a certain government is voted in, it is voted to precede crises, or to take measures whenever necessary, not to always say what we do at the moment of crises. Although let's say that public finances are not very sound in Albania, or that they are not in optimal condition, there are still measures that can be taken, as Greece, Serbia, and Kosovo are doing, which not far from yesterday, increased to subsidies for the planting of cereals in a significant way, gave 50 million euros of extra funds specifically for the planting of cereals", concludes for "Sinjalizo", expert Muço.
Even for the former Malay minister, the consequences of the impact of the crisis could be mitigated with a series of measures.
"These consequences can be mitigated by a set of integrated policies and measures. The social protection system should be as effective and focused as possible. Experts from the Bank of Albania and the Ministry of Finance and Social Protection, in cooperation with international institutions, can identify the optimal options. The establishment of the intergovernmental committee can harmonize cooperation on policies and measures that increase the effectiveness of relevant mitigation policies and measures.
Regulatory and supervisory authorities should closely monitor the risk of abusive benefits. Price reduction requires supply relief, this is conditioned by strategic reserves and diversification of purchasing sources. The first mitigations should come from injecting strategic reserves into the market to protect against high short-term fluctuations that harm economic growth. Diversification of alternative energy sources and potential partners, reduction of high levels of trade deficits – will be at the heart of a medium-term strategy", concludes the former Malay minister.
Indifferent government
In his last media appearance before leaving for Dubai, Prime Minister Edi Rama did not mention the increase in the prices of basket products, while he said that a government task force would be created to manage the coming crisis. as a result of the Russia-Ukraine conflict.
While the chairman of the Democratic Party, Lulzim Basha through a post on Facebook, proposed to the government the reduction of VAT for basket foods from 20% to 6%.
But according to the two economic experts, this decrease is not proven to have an impact on the increase in prices, and may even bring consequences to the state budget revenues.
