Prices, competition

Zealously and diligently, as requested by the prime minister, Deputy Development Minister Kimon Koulouris set about taming price rises as soon as he had assumed his duties. No doubt with the fruit-crate battle of 20 years ago in mind, he began with retail fruit and vegetables. There the sector’s axes of good and evil play a leading role: The central vegetable market and the profiteering wholesalers of the past, whose reactivation as retailers is being used as a threat to hang over retail sellers and local street markets, is being coupled with an extension of the latter’s operating hours – itself a form of pressure on supermarkets to lower their prices. The price-cutting objective is being pursued by means of television announcements and meetings between the deputy minister and those involved, interspersed with television reports of eloquent recrimination between buyers and sellers as to whether the latter’s prices are high or the former’s wages low. Perhaps this is not all in vain. Foodstuffs represent a considerable proportion of some households’ expenditure, especially of those with low incomes and children. And if one method of holding down prices is by broadening competition in the retail market, then seeking a way to accomplish that is worthwhile. But it seems that in an economic environment very different from the one in which the wholesalers dominated decades ago, the same tactic is being used as it was then. There is no evidence of any analysis of the extent to which each stage of production, transport and sale contributes to the rise in the final price, or of the degree to which seasonal factors justify the price of some products. Nor can one see any special analysis of inflationary pressures on prices, while one recalls how the government focused its concern about unjustified price rises in 1999 following devaluation of these sectors. The fact that inflationary pressure now comes from the euro does not negate the fact that these sectors are highly susceptible to unjustified price adjustments. Longer opening hours for street markets may help contain prices, but the government’s aim is too ambitious to be served mainly by this measure. The fruit-crate battle may gain television coverage, but it won’t defeat rising prices. That requires different tactics, probably more discreet in terms of publicity and more effective, to bolster the forces of competition – the only ones in an open market able to bring prices into balance.

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