Rising food prices in Germany has prompted the government to intensify its measures to curb the inflating prices. Major reasons for high food prices are using raw material for energy production.
Juergen Abraham, Chairman of the German Food Industry Association (BDE), said that the food prices rose significantly in 2007 at an average of 3.1% on 12-month basis. Butter price increased by 19.1% while flour price increased by 15.4%, as reported by Monsters and Critics.
Juergen Abraham said that the demand for agriculture products in the international market and increasing use of farmlands for biofuels was aggravating the situation. But the main reason for price rise of food products in the country is escalating prices of raw agriculture material. Dietary habits are also contributing in this hike because of heavy use of raw materials.
Another main reason for price increase of food products is excessive use of cereal grains such as barley for producing energy. The rising demand for barley for food products and energy production is resulting in its shortage. As a result, the price of barley has increased, inflating the prices of food products too.
The burgeoning competition in the food industry is also responsible for food price rise. Companies are focusing on packaging of their food products so that people attract towards them but in this process, input price increases and ultimately, the prices of essential commodities rise. Moreover, the economy of Germany is growing at a rapid pace.
High import prices are also influencing the prices of essential commodities in the country. Imported food products are greatly affected by increase in import duties and therefore, end users buy the imported product at high price.
The German government is taking all necessary measures to curb the price rise in food products. It has warned the banks to reduce the interest rates on essential commodities (German banks haven’t changed their interest rates since June 2007).
A Research Analyst at RNCOS opines, “The prices of essential commodities are going up dramatically. Consequently, retailers and end users are the one who are suffering the most from this rise. The government has to take some necessary steps like providing low cost food in supermarkets owned by the government and ration shops to make food products accessible to the low income group at low cost.”
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