Fuel for food? Greece’s government to tax oil companies to relieve food prices

19 Dec 2022 --- Greek leaders plan to subsidize 10% of monthly food costs for 85% of households and over eight million citizens from February to July next year with money coming from the oil industry. Greece will tax two oil refineries – Helleniq Energy and Motor Oil – to raise an estimated €650 million (US$691 million) to fund this initiative.

Food inflation in Greece has consistently increased month after month this 2022 until reaching 15% this November – starting at 5.2% this January – according to the National Statistical Service of Greece.

The country’s general inflation rate peaked in June and is now running significantly lower than the food inflation rate at 8.5% this November.

Relieving families
According to the country’s finance ministry, the measure will help relieve prices across supermarkets and food businesses, including bakeries, fishmongers and pastry shops.

Individuals will be able to apply for a maximum of €220 (US$234) for the duration of the program, while large families will receive a maximum of €1,000 (US$1,063.)

The measure will apply for households with an income up to €24,000 (US$25.523), with an additional €5,000 (US$5,317) for each child.

Greece has been one of the countries in Europe with more social unrest due to high food prices, with protests erupting in the country this April. 

Eurozone sky-high food prices
According to Eurostat, food prices in the EU19 have gone up 16% this year. 

While prices have run red-hot this 2022, they still don’t show signs of having reached a peak. Food inflation accelerated by 0.5% from October to November this year. While significant, 0.5% is the slowest monthly increase since the one from December 2021 to January 2022 (0.4%).

Meanwhile, general inflation in the Euro area decreased from 10.6% in October to 10.1% in November. 

To showcase the pain in commodity prices for the bloc, the EU27 milk prices are up 43% this year, according to the European Commission.

Jukka Likitalo, secretary General of Eucolait, told FoodIngredientsFirst last week that 2023 is shaping up to be uncertain for dairy availability and prices.

Other strained commodities are pork prices (54.9% up this year, 95% for piglets) and turkey prices.

According to Eurostat, turkey prices in October averaged 446.5 points – up from 190.27 at the start of the year in the EU – using 2015 as a 100 points baseline. To compare, general meat prices for the euro area (EU19) are only 26.98% higher than in 2015.

Inflation peak for the giants?
In the world’s largest economy, the US, food inflation peaked this August at 11.4%, decreasing steadily since then to reach 10.6% this November, according to the US bureau of statistics.

“Food prices are expected to grow more slowly in 2023 than in 2022, but still at above historical average rates. In 2023, all food prices are predicted to increase between 3 and 4%, food-at-home prices are predicted to increase between 2.5 and 3.5%, and food-away-from-home prices are predicted to increase between 4% and 5%,” reveals the US Department of Agriculture (USDA).

The USDA predicts that egg prices will finish the year around 30% higher than one year ago, meat prices around 14% higher, fruits and vegetables between 8% and 9% higher, fats and oils around 19% higher and sugar and sweets around 10.5% higher.

The second biggest global economy, China, halved its food inflation in a single month (from 7 to 3.7%), with food prices driven to lower levels given the country’s dramatic decline in pork prices. 

Pork meat prices reached almost 100% inflation in the Asian nation, with the authorities intervening in the market to control the relentless price escalation.

Official data from China put pork prices at 22.5% higher than one year ago during the first week of December.

By Marc Cervera