Skopje, 10 January 2023 (MIA) – Prices dropped by 0.2 percent in December as compared to November, a positive development after a year and a half of price hikes. However, this minimal drop is due to the government subsidies for food manufacturing companies' electric bills so prices are expected to keep rising in 2023, according to Branimir Jovanovikj, an economist at the Vienna Institute for International Economic Studies.

“The price of food products in December fell by 1.5 percent compared to November, which is much less than the 10 percent announced by the government. Businesses are exploiting the situation again, and instead of reducing their prices due to cheaper electricity, they are increasing their profits. To be honest, I am not surprised by this at all, because I see no reason why they wouldn’t be doing it, when they have already been doing so for a year,” Jovanovikj told MIA.

According to Jovanovikj, prices will continue to grow in the upcoming period, albeit at a slower pace than in 2022.

“All expectations point that inflation will remain quite high in 2023 as well. Our institute is projecting that the level of inflation in Macedonia will be 10 percent for the whole of 2023, which may be lower than the 14.2 percent in 2022, but is still an exceptionally high level,” said Jovanovikj.

Jovanovikj recommends that the government adopt two sets of measures to alleviate the issue. The first set is aimed at reining in inflation; the second, at raising incomes.

“In order to rein in this inflation, the government should carry out inspections at all larger companies in the food industry, including producers, wholesalers and supermarkets, and introduce strict fines for those who are not complying with the measures.

“Croatia is currently doing something like this. Many businesses there took advantage of the introduction of the euro to ramp up prices. But if their government can respond with a strict approach, then so can ours. The second option, which is better but also less realistic in Macedonia, is for the government to cap the prices of food products, since it is already more than obvious that alternative measures are not effective,” Jovanovikj said.

According to the economics expert, the government should also implement a set of measures aimed at increasing the income of the citizens.

“The minimum wage should be increased, at least by as much as inflation, the wages in the public should be raised by the same amount, as well as the pensions and all types of social welfare payments. If this is not done, tens of thousands of citizens will sink into poverty.

“Apart from the government, I also think it’s time for the citizens themselves to do something due to the rising prices, and again Croatia is currently a good example. The people there have begun creating walls of shame, i.e., lists of businesses that have unjustifiably raised their prices. It would be good for someone to start doing this in Macedonia, and I am sure that if one person does so, many others will quickly join,” he said.

The State Statistical Office announced on Monday that the cost of living in 2022, compared to 2021, grew by 14.2 percent, while retail prices grew by 12.6 percent. Additionally, the consumer price index in December 2022, in comparison with December 2021, increased by 18.7 percent, while the retail price index increased by 15.1 percent.

The Federation of Trade Unions of Macedonia said on Monday that a family of four needed 51.235 denars in December 2022 to meet the needs of the minimal consumer basket. According to their calculations, in December a family of four needed 19.226,11 denars for food and drinks, 13.093,22 denars for accommodation, 3.050,95 denars for maintaining hygiene, and 3.668,61 denars for transportation. For clothes and shoes, a family had to allocate 2.255,15 denars, 1.067,86 denars for culture and entertainment, and 801,29 denars for healthcare.

“A single family of four needed 43.163,17 denars to meet the needs of the minimal consumer basket, and once we add the inflation of 18.7 percent or 8.071,51 denars to this sum, we reach a figure of 51.234,68 denars,” the unionists said. ad/mr