EU ministers yesterday warned that high prices were here to stay for the foreseeable future and urged the Commission to keep a close watch on market speculation that might be driving prices up.
“Oil prices and food prices will remain at very high levels. This is something new, and we have to accommodate and adjust to these problems,” said Luxembourg’s Prime Minister Jean-Claude Juncker.
He said member states should monitor market speculation because this was one of the major explanations for the rise in world food and fuel prices.
A joint statement by the finance ministers said the oil price crisis underscored the need to foster energy efficiency and alternative energy sources.
“The fact of the matter is that there are very obvious signs that things are of a more long-term nature than was thought at the beginning,” said Slovenia’s Finance Minister Andrej Bajuk, who chaired the ministers’ meeting.
The EU ministers’ warning came a day after an EU survey showed recent food prices within the bloc had increased at twice the rate of inflation. Annual increases of food prices ranged from 3.2 per cent in Portugal to 25.4 per cent in Bulgaria year on year in April. Other eastern European member states also experienced high increases.
The EU average was 7.1 per cent compared to inflation of 3.6 per cent, while in the euro area food price increases rose 6.2 per cent compared to inflation of 3.3 per cent.
Cyprus, with food prices higher by 5.8 per cent compared to inflation of 4.3 per cent, was one of the countries in a better overall position, along with the Netherlands, France and Italy, which all ranged between five and six per cent.
While Cyprus appeared to do well overall when it came to lower increases, when compared to euro zone countries, the picture changes.
The biggest increase in Cyprus was for bread and cereals, which rose 11.4 per cent year on year in April. Out of the 15 euro zone countries, this was the fifth highest increase.
Out of all the euro zone countries, Cyprus had the biggest increase in the price of fruit, showing a hike of 22.7 per cent, twice and three times those of other countries except the new member states.
On the other hand, when it came to milk, cheese and eggs, Cyprus, at 3.4 per cent, had the lowest increase of all 27 member states. In the remainder of the bloc, increases in these products ranged from 8.1 per cent in Greece to 35 per cent in Estonia.
The increase of 2.2 per cent in the price of meat in Cyprus was also low, but not the lowest, while the price of fish and seafood fell 0.3 per cent and 0.7 per cent in Luxembourg. All other countries showed an increase up to ten per cent.
Sugar, jam and chocolate also fell in price in Cyprus by 2.4 per cent, while rising up to 11 per cent in some member states.
“March and April 2008 recorded the highest annual increases in food prices in both the EU and the euro area since the beginning of the series in 1996,” said Eurostat.
It said that before April 2008, food prices had risen at a similar rate to overall inflation.
The EU ministers said yesterday Europe should not respond to increasing prices by offering short-term tax breaks but should instead aim for a more efficient agricultural sector. They should also ensure that the growing of crops for biofuels does not lead to food shortages.
“I’m not sure whether we’ve got to get used to rising oil prices, but I do believe we’ve got to get used to high oil prices. The most fundamental and best way to deal with that is just to make sure that our economies become less dependent on that source of energy,” Dutch Finance Minister Wouter Bos said.
Yesterday’s ministers’ meeting came as the United Nations Food and Agricultural Organisation (FAO) held a summit on the global food crisis in Rome.
