Czech food prices to rise by up to 8 pct due to CNB intervention

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published: 07.01.2014, 13:42 | updated: 07.01.2014 13:53:39

Prague - Czech food producers expect that food prices will grow by 5 to 8 percent starting from January 1 as a result of forex interventions launched by the Czech National Bank (CNB), Food Chamber spokeswoman Jarmila Stolcova told CTK today.

The weakening of the crown currency following the central bank's interventions is criticised above all by those producers that import a large part of commodities for their production, such as smaller producers of sweets and some meat processors, Stolcova said.

Growing costs are forcing food companies to cut margins, but a number of them cannot afford further reduction. Some producers even fear they will have to restrict production and cut staff numbers, according to Stolcova.

Meat processing companies, for example, say they have limited pig imports from abroad and increased slaughters of pigs from Czech farmers as a result of interventions.

They say a higher price of grain will raise prices of fodder, which will then lead to a growth in the prices of foods of animal origin, especially meat and eggs.

"The CNB's intervention had a largely positive impact on milk processors and dairies that export a large part of their production," Stolcova noted.

By contrast, an increase in prices and a related reduction of imports can be a positive thing for Czech producers.

"Even though many companies had secured exchange rates of the euro and the dollar at prices agreed in advance in banks, they reckon with a loss, according to their preliminary calculations," Stolcova said.

The reason are long-term contracts in Czech crowns for products made from imported commodities paid for in euros, for example.

The CNB launched the forex interventions on November 7. The crown's value dropped to near Kc27/EUR after the move.

Author:
www.ctk.cz

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