Groceries will become more expensive again in Ukraine – supermarkets are lobbying for the abolition of restrictions on markups

By the end of 2016, residents of Ukraine will face another round of rising food prices due to the upcoming abolition of state regulation of prices, which is being lobbied by large supermarket chains.

Director of the Ukrainian Association of Retail Chain Suppliers Alexey Doroshenko stated this at a press conference in Kyiv.

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“In 1996, the government took responsibility and decided that from field to shelf, social products should not rise in price by more than 30%. Now the situation is the same as in 1996 - the lowest level of consumption since the mid-90s.

I believe that deregulating the economy is necessary, but raising prices is not. Because this markup, 30%, consists of a manufacturer and wholesaler markup of 15%, and a store markup of another 15%.

A year and a half ago, we talked with the Deputy Minister of Economy and decided to cancel the markup limit for the manufacturer (because it constrains production), but it is too early to cancel the markup limit for retail. Because in recent years, problems in pricing have arisen precisely in trade. If we cancel it now, it will definitely lead to higher prices.

The last decision of the Antimonopoly Committee on the consumer goods market was in 2015. Since then, AMCU has not worked in this market; it works exclusively in the business niche. Then, in 2015, the AMCU in its study showed that the markup on food products in retail chains ranges from 30-40% and higher. Even on social food products the markup was up to 30%.

I recently spoke with representatives of retail chains, and they say that they are really looking forward to the abolition of state regulation of pricing and will revise prices upward. The markup will be at least 25%. According to our estimates, this additional factor will account for 50% of the rise in price of social products by the end of the year. If on average they rise in price by 10%, then 5% will be due to the abolition of state regulation of markups,” the specialist said.