As holidays approach, activity in markets and supermarkets increases, and the demand for daily food products rises significantly. Especially before Novruz and Ramadan, the tradition of having abundant tables directly affects sales. During this period, an increase in prices of some products is observed, and different opinions circulate in society regarding its reasons. So, is the food price increase during holidays mainly due to seasonal demand, or do artificial price hikes play a bigger role?
In this regard, in a statement to Medianews.az, Mammad Talibli, head of the Economic Analysis Institute and economist-expert, said that the price increase coinciding with the holiday period has become a traditional occurrence.
According to him, while in developed countries the holiday period is mostly accompanied by discount campaigns and stimulating sales strategies, here we observe the opposite — price increases. One of the main reasons for this difference is related to the social and economic environment formed in the market. As soon as demand rises, price increases have become a usual market behavior, which is in a certain sense also based on psychological grounds:
“Another important factor is that products enter the market from the same position and a few main players control the market. In markets where the competitive environment is weak and monopolization is widespread, the free and fair formation of prices becomes difficult. Especially in the import sector, the existence of fully or partially monopolistic structures accelerates price increases even more. Although the situation is somewhat different in the production sector, there too, the division of market share among a limited number of subjects weakens competition.”
The expert noted that at the same time, the mechanisms intended to regulate the market do not work effectively in practice:
“Since institutions that protect consumer rights and structures that monitor food safety do not have direct influence over price policies, they cannot effectively intervene in the process. Although there is a normative base, there are gaps in the implementation mechanisms. While the adoption of the Competition Code raised certain hopes, at the current stage this document has not led to fundamental changes in the market. As a result, price increases during every period of rising demand practically become inevitable.”
Oguz Ayvaz
Medianews.az