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Saturday, June 15, 2024
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The government is limiting margins for traders to five to fifteen percent

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Trade margins in wholesale and retail will be limited to five to fifteen percent for certain basic necessities, food products, and hygiene products, according to a document from the Ministry of Economic Development.

These changes are part of amendments to the Decision on Temporary Measures to Limit the Prices of Products of Special Importance for Life and Health of People and the List of Products.

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The rationale provided states that this is a comprehensive action, as it applies not only to one article from a particular group of products but to all articles within a given category of products. For example, the margin limitation for chicken meat applies to whole chicken, drumsticks, white chicken meat, wings, thus encompassing hundreds of product categories in each major retail chain.

The list of products subject to margin limitations is divided into three groups. For the first group of products, margins are limited by a Government decision from June 2022, and now it is proposed to extend these limitations. Wholesale margins will continue to be limited to five percent, while retail margins will be limited to seven percent for wheat flour types 400 and 500, granulated sugar, edible sunflower oil, and kitchen salt. Margin is limited only for salt in one-kilogram packaging, while for other products in the group, margin limitations apply to all weight packages.

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In the second group, where margin limitations in wholesale and retail are now proposed at ten percent each, there are 31 categories of food products, such as domestic cheese, bottled (still and carbonated) water, yogurt, chicken eggs 10 pieces, potatoes, milk, chicken meat, pork meat with and without bones, rice, frozen fruits, and vegetables. Only for eggs, the margin is limited to ten pieces, while for other categories, there are no limitations. The reduction in margins is mandatory regardless of weight, quantity, manufacturer, or subgroup of these categories.

The third group includes hygiene products, with proposed wholesale margin limitations at ten percent and retail at fifteen percent. This group includes children’s soap, baby diapers, baby shampoo and bath, adult shampoo and bath, toothpaste, toilet paper, liquid and powder detergents, and sanitary pads.

Margin is a part of the price of each product by which the trader covers their costs and generates profit.

The rationale for the decision stated that in accordance with the Law on Temporary Measures to Limit the Prices of Products of Special Importance for the Life and Health of People, adopted by the Parliament in May 2022, the Government in June determined the Decision on the Temporary Limitation of Margins in Wholesale Trade to five percent and in small shops to seven percent for wheat flour (types 400 and 500), sugar, sunflower oil, and kitchen salt.

The aim of that decision was to limit the increase in prices of basic necessities and influence the reduction of the inflation rate.

Data on the annual inflation rate from June 2022 to November of the same year, as stated in the rationale, indicate the justification for the introduction and extension of measures to establish price stability and protect the living standards of citizens to the extent possible.

According to data from Monstat, the annual inflation rate in June 2022 was 13.5 percent, continuing to rise until November of the same year, reaching a peak of 17.5 percent. Then, the inflation rate started to decline, reaching 4.8 percent in November of last year.

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