Prices in German stores are falling not only because of Russia
Vegetables and fruits are healthy and now especially cheap
Referring to the Federal Statistical Office of Germany (Destatis), Bild publishes a list of 87 food and industrial goods whose prices have fallen the most since the beginning of 2014. The first eight lines after salad are occupied by fruits and vegetables. Pumpkins, eggplants, and corn have fallen by 36.4%, tomatoes by 35.2%, cucumbers by 32.7%, grapes by 28.9%, strawberries and raspberries by 27.5%, potatoes by 19.3%, peaches by 19.2%.
Bild explains such a significant drop in vegetable and fruit prices in the typical brief style of the tabloid press: "Good harvest, export ban to Russia." Thus, the food embargo imposed by Russia on August 7 in response to Western sanctions has led, as experts predicted, to a significant decrease in consumer prices in Germany, which were already under pressure due to a very good harvest.
For example, German farmers managed to harvest a record amount of potatoes this year – about 11.5 million tons. This is almost 19% more than in the weak previous year and 5.4% more than the long-term average, the German Ministry of Agriculture reported at the end of September. As a result, consumers now have to pay about 30 percent less than exactly a year ago, the ministry notes. This is good for them, but low producer prices are naturally disadvantageous for farmers.
Consequences of the Russian food embargo
A similar picture is with apples, which have yielded excellently this year in many EU countries. In Germany, for the first time since 2009, over 1 million tons of apples were harvested, which is 8 percent more than the average of the last ten years, Destatis reported.
Moreover, market observers note that due to the Russian embargo, products from Poland, which is the world's largest exporter of apples and specialized in supplies to Russia, have flooded into Germany. Berlin supermarkets are already offering 5 kilograms for 2.50 euros, writes the newspaper Berliner Zeitung and emphasizes that such low prices "bring tears to farmers' eyes."
But let's return to German consumers, who, on the contrary, now go shopping with particular pleasure, as Bild notes. According to the list published in the newspaper, they are also purchasing meat and dairy products at significantly lower prices than at the beginning of the year. Butter has since fallen by 10.8%, pork chops by 2.7%, beef fillet by 2.4%. Eggs cost 9.1% less than in January.
Pig farmers see light at the end of the tunnel
Cheese was not included in the list, but just before the newspaper's release on October 7, all major German supermarket chains reduced prices by 13 percent or more on a wide range of cheese products. For example, at the leading discounter Aldi, a 400-gram package of Gouda fell by 30 cents – from 2.19 to 1.89 euros. The German Dairy Industry Association explains this by two reasons: the continued growth of milk production in Germany and the Russian food embargo.
German pig farmers also refer to the closed Russian market. True, Russia imposed a ban on the import of pork from the entire EU back in January, citing cases of African swine fever (ASF) in Poland and Lithuania. In conditions of rapidly growing production in Germany, this led to market oversaturation. In the last four weeks, the wholesale price of one kilogram of pork fell from 1.596 to 1.346 euros, the Association of German Pig Farmers ISN reported on its portal on October 7.
But now there is light at the end of the tunnel, the report continues, as producers have felt the first signs of growing demand and, thanks to the weakening of the euro, have strengthened their competitiveness on foreign markets. As can be seen from the Bild list, retail prices for pork products have not fallen too much this year.
"Bild list" – illustration of deflationary trends
However, only 18 of the 87 items in the list of the popular German newspaper are food products. The rest are industrial goods: from the already mentioned computer games and coats to, for example, televisions, shampoos, men's shirts and sweaters (which fell by 4.5-5%) and to refrigerators, footballs, women's trousers and washing machines (which lost 2.5 to 3% in price).
Russia has nothing to do with this – unless, of course, one considers the fall in world oil and other energy prices, which allowed producers and sellers to reduce costs and increase their price competitiveness. Bild also points to the high euro exchange rate in the first half of the year, which, in particular, made purchases of textile products in Asia cheaper. Overall, the "Bild list" perfectly illustrates the deflationary trends emerging across the eurozone as a result of the protracted debt crisis, which caused annual inflation in September to fall to its lowest level in five years at 0.3% (in Germany – 0.8%).
So, Bild readers and all German shoppers can continue to enjoy shopping trips and rejoice at falling prices for now, but the European Central Bank (ECB) in the coming months will clearly step up efforts to prevent the eurozone from sliding into economically destructive deflation. In other words, do everything possible to ensure that prices do not fall but remain stable or rise minimally.
Andrey GURKOV,
Deutsche Welle