OREANDA-NEWS. March 03, 2008. Prices of food products will increase by an average 20 percent this year, and increasingly often residents will prefer inexpensive products to expensive ones, as Inguna Gulbe, director at the Agricultural Market Promotion Center, told the newspaper "Dienas Bizness".

According to Gulbe, the increasing prices of food products are due to a rapidly increasing demand in such growing economies as China and India, as well as increasing prices for energy resources.

Gulbe believes that prices of food products will increase by an average 20 percent this year due to the growing production costs. Energy, raw materials, labor costs will increase.

"There are products in Latvia that still are comparatively inexpensive, for instance, bread and beef, and the prices for these products will keep growing until they reach the average price level in the European Union. Only sugar prices in Latvia are higher than the average sugar prices in Europe," Gulbe said.

In Gulbe's opinion, there is nothing that the government can do to stop the prices from rising. "The only way would be to pay subsidies to farmers, but it is not permitted in the EU," Gulbe said.

Gulbe also points out that chain stores' mark-ups on products have remained unchanged for quite a long time. However, very many functions of chain stores have become a responsibility of producers, for instance, it is producers who have to organize discounts, in very large amounts and very often. "And they have to do it, or else their products will be withdrawn from the chain stores," added Gulbe.