Accession to spark food costs rise in Poland

A recent report from NOBE​, the Independent Center For Economic Studies, says that Poland's accession will cause an inflationary 'impulse', which although not strong, will be felt by a variety of industries, including the food and beverage sector.

The study reveals that extra consumer price growth could add a further 1.4 per cent on to the price of foods in Poland, increasing year-end inflation levels for 2004 to 3.1 percent.

NOBE says that this inflationary impulse will probably continue into the beginning of 2005, by which time the affects will slowly start to subside.

The temporary inflation will largely be caused by the adjustment of VAT and excise rates to EU levels, however the NOBE report stresses the fact that a great deal of this adjustment has already been made in the run up towards accession.

With particular reference to food and the food industry, the report confirms that food prices will rise from the introduction of the EU agricultural policy to the farming sector, a move which will push costs as a result of increased administration and quality procedures. Production costs for food processors are also expected to rise, although the NOBE report does stress that this impact is not expected to be great.

Though with rising levels of competition, increased production efficiency and the scrapping of remaining tariff duties, some sectors of the food and beverage industry could eventually see prices begin to fall in the longer term, the report reveals.

Report author Witold Orlowski believes that some 40 per cent of the inflationary blip will be attributed to added foods costs. However, as the percentage of household expenditure on food is far higher in Poland than in other existing EU countries, the increase is expected to have a significant impact on the average citizen. Indeed the EU average currently stands at around 16 per cent of all income being spent on food, whereas in Poland that figure stands at around 30 per cent.

"Polish farmers will get better prices for beef, milk, or sugar,"​ Orlowski said. "It is sugar prices that will rise most sharply, though I don't expect them to rise by 30 per cent, as some forecasts suggest. Consumers will be more affected by rises in prices of sugar-based products, such as confectionery, though it is also possible that sugar producers will use the opportunity to raise prices at all."​

Historically recent additions to the EU have included Greece, Spain and Portugal, all of whom experienced inflation decreasing after the first year of membership. However, the report also points out that inflation in those countries was high at the time and that in Poland the rate is currently a lot more stable.