Thanks to the slowdown in energy and raw material prices, we left the peak in inflation behind, but the shopping slip continues to increase. From where? What happens to food prices? But above all, will supermarket prices return to pre-crisis levels?
“Companies are lowering prices, but they’re not doing it the way they should,” said Mauro Antonelli, director of the National Consumers’ Union (UNC) research centre. TodayHe added that the prices of some products may return to their previous levels, while others will not. The Observatory Meloni asked for on purchasing power was denied: “It won’t help. Ever since the introduction of the euro, observers and monitoring have been making fun of us. It’s time to act from words to action, observation doesn’t help If nothing is done against those who speculate afterwards, nothing will happen.” ”.
Producer prices: -4.8% in April
If there is a decrease in the invoices, why is there not the same decrease in the final product prices? In April, producer prices decreased by 4.8% in one month, while inflation increased by 0.4% (from 7.6% to 8.2% on an annual basis). With the fall in production prices approved by Istat, companies have no excuses: the prices of finished products must fall or entrepreneurs will be blamed for wanting to make more profits while ignoring the hardships of the poorest families.
Antonelli comments that “there is a usual problem of prices doubling” and underlines that companies reduce prices, but do so very slowly. “When it comes to lowering prices, companies don’t do that”. From where? Along with all the criminal speculation, there are also some ‘mistakes’ committed by the Meloni government.
Because prices in Italy do not fall
Supermarket prices cannot return to pre-crisis levels because electricity and gas prices are still far from what they were a year and a half ago. Until now, gas was supplied to Italy from Russia at advantageous prices, but now we pay much more for energy. Antonelli says it’s still pretty hard to imagine what will happen to the price of gas in 10 years. We’ll have to see how the scenario will change after the war in Ukraine is over,” and “if we can” solve the expensive bill problem by switching to energy”.
“However, higher gas levels than in the past do not justify the increase in retail prices. Today half a kilo of pasta is sold for more than 1 euro: these are prices that are disproportionate to the real situation.” The expert states that the slowdown in prices is very low as there are mandatory expenses in food products. For example, sugar still holds the record for growth among food products (+52.6%), because the companies that produce it know they can sell it anyway (1 kg costs less than 2 Euros, which is not a number prohibitive).
Products that are in high demand and cannot be given up by the consumer are unlikely to return to their old prices, especially when there is no competition. “If there was a company willing to sell the product at lower prices in order to conquer market shares, then prices would fall and so others would have to do so,” Antonelli recalls, reminding that prices are also allowed to double. lack of competition in various sectors.
“Speculation yes, but the government also has a responsibility”
Increasing profit margins for companies is a sign, as Istat confirms, that some companies have decided not to change prices despite cheaper bills to avoid giving up extra earnings.
“Unfortunately, the market today allows for speculation,” Antonelli said, and reminded that all price increases are due to speculation on the price of gas. “The giving of more than 300 euros per megawatt hour on the Amsterdam stock exchange last August was not justified. Until September, everyone had to stock up for the winter and there was speculation on prices. It was purely speculation. They said they would market. They talked about separating electricity and gas prices as an alternative, but then this nonsense was not removed neither in Italy nor in Europe. Nothing was seen”.
According to the expert, there is currently some speculation in all sectors but also ‘due to’ from the Meloni government. In fact, reducing tax credits on business bills has only created more uncertainty about the future by encouraging entrepreneurs to accumulate earnings. “Companies that don’t know how electricity and gas prices will be in October prefer to keep prices high to face expensive bills”.
How to maintain purchasing power: recommendations
Wages will need to be raised if prices do not fall, but this move could be risky because it could push inflation even higher. “We must avoid the race between wages and inflation because if wages are automatically adjusted for real inflation, companies will pass these costs (just as with higher energy prices) into final product prices and eventually inflation.” . How to solve the problem?
Antonelli reintroduced the programmed inflation escalator used from 1983 to 1987. Automatically adjusting wages for inflation, but only for the lowest wages estimated by the government, below 35,000 euros, “because those who earn the most are not affected”.
Then there is the reduction of the tax wedge, “done in a substantial way, not by the Meloni government giving 100 euros more per month. To increase wages without weighing on companies, we need to reduce the tax on labor by shifting it to financial income rather than the extra profits of the electricity and gas companies that pay insignificant sums”.
No to system fees and SCT on gasoline
In order to protect the purchasing power of the poorest families, it is also possible to intervene by changing the tax system and avoid paying certain taxes such as electricity and gas system fees and excise duty on gasoline. “While the Meloni government reintroduced them all, the Draghi government reduced them, and that’s wrong. poor classes”.
Antonelli recalls that lighting and heating are paid for first and foremost by “retirees who stay at home all day, large families and the energy poor with old appliances; appliances, electric cars (he doesn’t spend a euro on oil), and therefore electricity costs him nothing”.
As a result, it is necessary to intervene not only in income but also in expenditures, namely household expenses, in order to protect the purchasing power of families without increasing wages so as not to trigger an inflationary spiral. Yes, lower prices, but at the same time, cut taxes and less taxes on the business, especially if you can’t even go shopping for food. Thus, we turn to the criterion of progressiveness of the tax system approved by Art. 35 of the Italian Constitution.
Continue reading at Today.it
Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
