As food prices rise, Austria asks EU to end supply constraints

Austria is considering price interventions at supermarkets to lower the cost of living. 

While price caps remain an option, the EU member has now sent a letter to Brussels asking to change rules of how food producers sell their groceries across the continent.

"Literally everything has gotten way more expensive," Vienna resident Jakob told CGTN. "They pin it on inflation but I think they just make it more expensive to make more profit." 

There seems to be no end to Europe's cost of living crisis. While Austria's grocery prices rose by a third over the last four years, supermarket chains did not increase their profits, a public study found. So who's to blame? 

"One measure that could be very helpful here is to abolish the territorial supply constraints by international food industries," says Daniel Witzani-Haim from Austria's Chamber of Labor. 

Territorial supply constraints mean big food players like P&G, Nestlé or Mondelez can sell their products at higher prices in small countries like Austria than for instance in Germany which negotiates better deals. 

"An Austrian retailer pays €3.20 for a can of hairspray, while a retailer in Germany pays only €2 for the same product,” says Rainer Will from the Austrian Retail Association. "That's a 60 percent difference in the beauty sector. For processed foods, the difference is up to 30 percent." 

Changing the law

In May, the EU Commission announced new measures but no legislative proposal against territorial supply restrictions. Austria's minister of economic affairs Wolfgang Hattmannsdorfer is calling for a change in the law by the end of the year. 

Giving retailers access to the same prices across the EU is just one measure that could lower grocery prices. Some European countries have tried to impose price caps with mixed results. 

Hungary and Croatia have previously imposed caps on a range of food products, although critics say this led to price increases for other products. 

"I think a very good example is France where we have very clear price transparency," says Witzani-Haim. "The companies know that they have to argue why they increase prices to the degree that they do." 

Austria's Retail Association claims such a price database would only increase bureaucracy and urged the root cause to be tackled - namely territorial supply restrictions.