Squeezing ROI out of caraway-seed bread

The ÚOHS antitrust office announced a sector probe yesterday of 3-5 unnamed basic food items to determine where in the supply chain the profit margins have risen the most. The results are to be ready in a few months. Eggs and sugar have increased in price over the past year by 85%, pork by 37% and bread by 30%. Grocery retailers, through lobbyist Tomáš Prouza, blame the price inflation mainly on the “agri-barons,” which is Prouza’s word for almost any of the big players in the supply chain other than the retailers. The retailers are indeed facing a difficult situation, whatever their ultimate share of the price rise. Their owners ave a certain expectation of return on investment (ROI), and the general impoverishment of parts of Czech society is changing consumer habits. People are spending less on anything “fancy” and are restricting themselves more to basic items. To keep their same ROI, grocery retailers must therefore raise the prices of the best-selling products disproportionately.

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