Romania caps food markup to 20% amid rising prices

Romania's Ministry of Agriculture is preparing an emergency decree to limit the markup on local food products to 20%. This initiative is a continuation of a previous cap on 17 basic products, which resulted in a 20-30% price decrease in June 2024 compared to the same month in 2023. Agriculture Minister Florin Barbu emphasized that capping prices is essential to combat excessive price increases and protect the purchasing power of Romanian citizens. Despite the potential benefits, the proposal has faced criticism from the Concordia employers' association. They argue that imposing such caps could distort market dynamics and is not feasible in a market economy. Radu Burnete, the executive director of Concordia, pointed out that Hungary's similar measures were ultimately abandoned due to adverse effects on the market. While the price ceilings on basic foodstuffs led to some reductions, they also caused price hikes on other products, failing to alleviate the overall cost of living. Romania continues to grapple with one of the highest inflation rates in the European Union, raising concerns about the effectiveness of these measures. The government aims to approve this decree before the autumn elections, indicating a political motivation behind the initiative. However, the mixed reactions from various stakeholders highlight the complexities of managing food prices in a challenging economic environment.