Debate: Tackling the inflation in food prices and its social consequences and root causes
Date: MONDAY, 26 FEBRUARY 2024
Speaker: Wopke Hoekstra
Language: EN

Ladies and gentlemen, there is no denying that recent crises have seriously affected food prices for our consumers. At the same time, we know that serious work lies ahead of us to deal with structural challenges in our food supply. And let me start with the impact of the recent crisis. Annual food inflation in the euro area peaked at 19.6 % in March 2023, and both processed and unprocessed food were affected. And we all know how important food is in the consumption basket of our households. And this is especially serious in countries where food represents a higher share of overall household consumption, notably in parts of central and eastern Europe. And it is serious throughout Europe for low income households, which were most affected by inflated energy prices as well. Ladies and gentlemen, the major drivers of food price inflation were the prices of key farming inputs like energy and fertilisers, especially following the horrible Russian invasion of Ukraine. In addition, wages in both food manufacturing and distribution have picked up in the last couple of years. However, since March 2023, food inflation is steadily slowing down across the European Union. Energy and fertiliser prices did go down after October 2022. Last month, food inflation stood at 4.8 % in the euro area and we’re seeing the first signs of food deflation since last summer. And this has had an impact on household income too: real gross disposable household income started to increase again in 2023. And let me be crystal clear, we should stay very vigilant against any renewed pressure on our food prices. This is, if you will, in a nutshell, the current situation.  But we should draw lessons for the work we have ahead of us. In March 2022, the Commission adopted a dedicated communication on food security and we suggested measures like improved flexibility of the Fund for European Aid to the Most Deprived to boost food banks. Our REPowerEU package included many measures to tackle energy poverty in particular, and the Commission welcomes moves in several Member States to reduce VAT on essential foods, which the Union made possible since April 2022. And we also welcome food vouchers or other support, particularly for the most vulnerable. At the same time, we must ensure that Member States’ actions against inflation, including price caps, do not have unintended consequences on our single market. The Commission continues to monitor markets and works with national competition authorities to investigate any anti-competitive behaviour that may actually inflate food prices. During the past year, several national competition authorities have launched investigations into pricing in the food chain. Looking ahead, the transition into sustainable food systems is a shared responsibility and let me stress that, Mr President, a shared responsibility where we should all share the costs and the benefits. Ladies and gentlemen, let me therefore stress that it cannot be the case that farmers alone face the cost of the transition. We’ve all heard and seen the discontent from farmers on the current functioning of the agri-food supply chain. And their ask for a fair reward for their efforts is absolutely valid. It is vital that the whole agri-food supply chain, including food, drink, retail, and even packaging and logistics, control their costs and ensure a fair sustainable price for all actors in the chain. The Commission is therefore looking into possible actions to improve the position of farmers in the supply chain and their fair remuneration. And we need to do so in a way that sustainable food remains affordable for all of our consumers because we will only have a resilient food system if commercial relationships are fair, with fair margins for all. Mr President, the strategic dialogue launched by the President of the Commission will help in understanding exactly these challenges. And we stand ready to listen to the concerns of farmers and other stakeholders, I want to remain in dialogue with the whole of our society. My offer on behalf of my colleague is that the Commission stands ready to engage in the debate and hear the suggestions of the esteemed Members of your Parliament on how to master it, and I look forward to this debate.