site.btaCalls for Boycotting Supermarkets Come When Consumer Food Inflation in Bulgaria Seems to Be Contained, Says Modern Trade Association Head

The calls for a boycott in Bulgaria come at a time when consumer food inflation seems to be contained - the National Statistical Institute (NSI) registered a decrease in inflation for December and this country is inches away from meeting the price stability criterion for joining the euro zone, Nikolay Valkanov, Executive Director of the Association for Modern Trade (AMT), when asked for comment on the call by four organisations for a supermarket boycott on 13 February.

The organisation has not made any estimates on the possible amount of turnover losses due to the boycott and does not intend to make any further estimates. However, Valkanov highlighted an observation from Croatia which shows that turnover increased drastically in the days immediately before and after the so-called boycotts.

According to Vulkanov, consumers have the opportunity every day to make their choice and judgement on which retailer and which goods to prefer with their shopping choices. He recalled that every week retail chains across the country put, according to their advertisements, between 400 and 1000 products on sale. These promotions cover a very wide range of products, including those from the small consumer basket, so the chains have always provided a wide palette of extremely affordable goods - each according to its policy and in competition with the other market players, added the Executive Director of the Association.

A comparison of the general price level of food and non-alcoholic beverages by EU countries shows that Bulgaria is among the cheapest destinations with a price level of 89 of the EU average (which is assumed to be 100) in 2023, Valkanov said.

Prices for bread and cereals (73.5) and meat (73) are lower than the EU average, while milk, dairy products and eggs are more expensive (125.9 vs. EU average=100). Slovakia, Poland and Romania are cheaper than Bulgaria.

According to another food price index, which is fed with information from consumers themselves - that of Numbeo, Bulgaria is 32nd out of 43 European countries in terms of the price of the basket that the index measures, and only Romania and Poland are cheaper than EU member states, the Association's Executive Director pointed out.

Referring to the proposals for the introduction of a cap on food surcharges, Valkanov said that any attempt of state intervention, either in terms of prices or surcharges, always has the opposite effect, leading to deficits, bankruptcies and even higher inflation. Bulgaria has enough negative experience in this regard, and the much fresher examples of Hungary, Romania, Croatia, showed that such measures lead to an increase in inflation, not to its control, the executive director of the Modern Trade Association pointed out.

In Valkanov's words, imposing a ceiling on the mark-up, only at the final retailer, does not guarantee a drop in prices, because nothing prevents everyone downstream to raise their prices to skim the difference. It also means imposing a ceiling on the costs of the final retailer, and in a very competitive market where different business models compete.

"By equalizing their costs - because markup does not mean profit, it means cost of doing business plus possibly some profit, it means capping business, therefore eliminating competition. Small traders would suffer the most from this," said Nikolay Valkanov.