Czech food prices grow nearly 7% last year, fastest in EU

The consumer prices of food and non-alcoholic drinks in the Czech Republic grew by 6.9 percent in 2012, which was the fastest growth among all European Union (EU) members, a report said on Friday. According to the report compiled by the Institute of Agricultural Economics and Information (UZEI), the growth was driven mainly by a growth of value added tax (VAT) rate on food from 10 to 14 percent, a 7 percent rise in prices of imported food, and a growth in commodity and energy prices. Prices of food and non-alcoholic drinks in the Czech increased more than 2.5 times compared with the average growth in the entire EU. "Beside a higher VAT and higher prices of agricultural commodities, food prices were also affected by a growth in imports of food from abroad, a growth in energy prices, inflation and then by retailers' higher margins above all on higher-quality food," said Food Chamber spokeswoman Jarmila Stolcova. She said the consumer prices are decided solely by retailers, "For this reason, we think that above all they (retailers) should explain the reason why they increased the price of food for consumers." The document shows that the growth of consumer prices was almost double that of food producers' prices which rose by 3.4 percent year-on-year. The Czech Association of Trade and Tourism said food prices in the Czech recorded an artificial growth in 2012 which was pulled mainly by two VAT hikes. The association's president Zdenek Juracka said that retailers could no longer absorb this growth given their low margins. "I would definitely rule out that the growth was caused by an increase in retailers' margins because the margins are not rising," he said. Spending on food, drinks and tobacco accounted for 22.8 percent of the total consumer spending of an average Czech household in 2012. Compared with the rest of EU countries, the Czech ranks high above the average.