Europe reports Record Prices for Bread, in Bulgaria the Increase is almost 30%

Business » INDUSTRY | September 20, 2022, Tuesday // 09:11
Bulgaria: Europe reports Record Prices for Bread, in Bulgaria the Increase is almost 30% @Pixabay

The price of bread in Europe has risen by almost a fifth in the past year - the biggest increase since data were collected, the EU statistics office Eurostat reported.

In August, fueled by export troubles in two of the world's biggest grain exporters, Russia and Ukraine, it was 18% higher than a year earlier.

World wheat prices have been rising steadily since February because of the war in Ukraine, which has hampered exports from the two countries, which, in addition to being among the world's largest producers of grain, are also the biggest producers of fertilizers. In addition, the huge jump in the price of natural gas forced fertilizer producers in Europe to close, and others raised the prices of their products several times.

Ukraine's Black Sea exports have been blocked for more than five months, and its sanctions have cut off access to Baltic ports used by Russia to ship ammonia, a key ingredient in nitrate fertilizer.

The price is high, although "average"

The average price of bread in the EU was 18% higher in August 2022 than a year earlier, according to Eurostat data. This is the biggest price increase since December 2017. For comparison, for the whole of 2021, the price of bread has increased by 3%.

Hungary and Lithuania saw the highest annual changes in the average price of bread, with increases of 66% and 33% respectively.

The countries with the smallest price changes were France with 8% and the Netherlands and Luxembourg, which recorded growth of 10% each.

Bulgaria is in the top 10 in terms of price increase

Bulgaria is in eighth place in terms of price increase in the EU, with an almost 30% increase in one year. Romania is in tenth place with a price increase of 25%, and Greece is behind it with 23 percent.

The increase in the price of bread in Bulgaria, which occupies a central place in the consumer's basket, at first glance seems strange because of the reductions to zero VAT both on it and on flour with the budget update, effective from July 9. However, the manufacturers explain that even though the tax is 0%, it is charged after all other expenses, which continue to rise - for electricity, for gas, for salaries.

"The price of bread without VAT does not mean a frozen price. But at the moment, the prices in the retail chains are the same as they were on July 9. There is no change in the prices of bread at the moment," commented Mariana Kukusheva, president of the National Branch Union of bakers and confectioners in front of bTV. She reminded that what the price of bread will be in the coming months also depends on how long the aid from the budget for businesses will last because of the high price of electricity.

The reduced VAT from 20% to 0% for flour and bread is currently planned to last for 1 year - until July 31, 2023.

Kukusheva also explained several times that the price of bread will follow the trend of rising transport costs, but it will never be the same as it would be for end customers if VAT is 20%.

At the same time, the data of the National Statistical Institute show, albeit slowly, a constant decrease in the amount of bread consumed in the country. In the second quarter of this year it was 18.9 kg per household, a year earlier it was 19.6 kg. During the same period, but 5 years ago - in March-June 2017, the amount was 21.6 kg.

The region reported the biggest price increase

It is noteworthy that the top ten countries where the price of bread has risen most significantly are in Central and Eastern Europe, which, in addition to Hungary and Lithuania, also includes Estonia and Slovakia. Croatia, Poland, Latvia and the Czech Republic.

Already at the beginning of the year, economists commented that inflation is higher in the less developed parts of Europe, where Bulgaria is also located, as it also reflects the "catch-up" effect of prices operating in the developed part of Europe. Thus, in the South-Eastern part of the continent, the price increase on an annual basis is double-digit and is reflected in the final prices of all products. For example, in August inflation in Hungary was 15.6%, in Lithuania it was 22.4%, and these are the countries with the largest increase in the price of bread. In comparison, in France, where the increase in the price of this product is much less for a year, inflation calms down in August and is only 5.9% for a year.

The only Eastern European country with less than a 20% increase in the price of bread is Slovenia (13th place).

Bread prices started to rise since February when Russia started the war in Ukraine.

Combined bread and cereal prices rose 16.6% in August, their biggest increase since January 1997, the statistics show.

Eurozone inflation hit a record high of 9.1% in August, Eurostat confirmed on Friday, driven by sharply higher energy and food prices.

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