Prices of food, drink and tobacco up sharply

Prices of food and soft drinks rose by nearly 7% between March 2000 and March 2001. This is all the more remarkable as they fall under the low VAT rate, which was not raised on 1 January this year.

Generally speaking the prices of products in this group do not rise all that drastically. Between 1990 and 2000 they rose by an average 1.3% a year, about half of the average inflation rate.

Consumer price index (change on previous year)

At the start of 2000 food prices were on average 1.6% lower than twelve months previously. In March 2001, however, they were 6.8% higher than in March 2000. Part of the difference can be explained by the fact that fresh fruit, fresh vegetables and potatoes were much cheaper in March 2000 than in March 1999. Between March last year and March this year the prices shot up again: for fruit by 10%, for fresh vegetables by 18% and for potatoes by 18%.

Food prices which traditionally do not fluctuate much have also risen substantially in the last year. Meat prices, which have risen by less than one per cent on average in the last ten years rose by 9% in the last twelve months. Similar developments can be seen for milk, cheese, eggs and bread and cereals.

Prices of various foodstuffs, 1st quarter 2001 compared with 1st quarter 2000

Prices of alcoholic beverages and tobacco rose by even more: 7.2% on average, 1.3 percentage points of which were caused by the increase in the rate of VAT.

Tobacco prices rose by an average 5.5% per year from 1990 to 2000. So the increase of 7.9% in the twelve months to March 2001 was somewhat higher. Alcoholic beverages rose more sharply in price, by 6% compared with an average 1.5% in the previous ten years.

The jump in price increases for food and soft drinks has been observed in early all countries of the European Union. In the Eurozone prices of these products rose by an average 4.4%.

Jan Walschots