Business association voices concern over Ukrainian government-imposed food price caps

15 January, 01:07 AM

The Ukrainian Retail Association has voiced concern over the introduction of additional government controls over retail food prices, according to a press statement released by the organization.

The Ukrainian government on Jan. 12 decided to set a 10-percent cap on price markups of certain food products. According to the association, there was no previous public discussion about this change and businesses have not been consulted.

“As is known, the current food price increases were triggered not by retailer markups, but by price increases from the supplier side, which, in turn, have been forced to raise prices in relation to the rise in (gas) prices, as well as other factors that make up the cost of production,” the association said.

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The members of the Ukrainian Retail Association also pointed out that no transition period has been put in place to enable companies to adapt to the regulatory changes, and they have not been given a chance to submit counterproposals to the government.

“We would like to draw your attention to the fact that a previous decision by the (Ukrainian Cabinet of Ministers) from Dec. 30 … has already triggered a crisis situation in retail,” the association said.

“Businesses were not given a chance to prepare for the oncoming changes. No additional explanation on price formation for certain key food products has been provided.”

Retailers believe that extending the price cap to another nine food product categories may disrupt the supply chain and affect hundreds of food products until a clear and transparent regulatory mechanism is put in place.

As a result, the Ukrainian Retail Association says that they’re calling on the Cabinet to postpone introducing the new regulations due to the lack of transparency around the changes, and engage in consultations with business to discuss the effectiveness of the proposed price caps.

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