Ramadhan | Market supply – Faouzi Chokri, agro-economist, to La Presse: “The government can encourage companies to moderate the rise in prices”

“If the year 2022 was punctuated by rising food prices, but also by certain food shortages, 2023, and especially during the month of Ramadan, should continue on this unfortunate path. This year once more, products are likely to be absent from the shelves and shopping will always require a financial effort. The effects of inflation will continue to be felt in 2023”.

With the approach of the month of Ramadan, concerns regarding supplies are resurfacing. What is the market supply situation and consumer product prices like today?

The availability of food products is analyzed through the supply of products on the markets (quantity and diversity), the existence of stocks at the micro and macro level and the study of flows. As the month of Ramadan approaches, it is necessary to first understand the structure of national food availability. Indeed, depending on the country’s degree of dependence on imports, attention must more or less be focused on international markets.

In Tunisia, considered as a country highly dependent on imports, prices on domestic markets are generally linked to international fluctuations. However, urban or rural markets may react differently to these variations depending on their level of dependence and integration. For regional markets, the analysis focuses more on the results of agricultural campaigns. Prices are then closely correlated to the availability of these products.

Could the specter of commodity shortages continue in this high-consumption month?

If the year 2022 was punctuated by the rise in food prices, but also by certain food shortages, 2023, and especially during the month of Ramadan, should continue on this unfortunate momentum. This year once more, products are likely to be absent from the shelves and shopping will always require a financial effort. The effects of inflation will continue to be felt in 2023. Food, but also hygiene and cleaning products, shopping will continue to weigh on Tunisians’ budgets, in a very difficult economic context.

Regarding prices, which are closely monitored, how can we limit their increases? How can galloping inflation be thwarted to preserve citizens’ purchasing power?

The year 2022 will remain marked by historic inflation, with record rates not seen for decades. The current economic crisis affects all sectors presented by a shortage of raw materials and an exponential rise in prices. For individuals, inflation in 2022, and continuing into 2023, means a net increase in the cost of energy, food and interest rates.

Consequently, our purchasing power and savings are negatively impacted. To counteract the negative effects of inflation, the public authorities must imperatively take immediate measures for inflation of monetary origin.

The Central Bank then seeks to restrict the money supply in circulation, by reducing the volume of credit distributed by commercial banks. To do this, it will resort to a credit control policy (limitation of the volume of credit distributed by increasing interest rates). The risk of this type of policy is to slow down economic activity (investments and consumption with more expensive credits) and therefore to cause a recession which will generate unemployment.

For inflation due to excess demand (budgetary policy), the public authority can then use budgetary policy, by lowering the income distributed by the State (limitation of the progression of civil servants’ income, reduction of work programs public, etc.), by increasing public revenue (taxes, duties, etc.). The objective is to reduce the income available for consumption and therefore to restore the supply/demand balance. For inflation due to production costs (incomes policy), price controls and incomes policy are the instruments used. The government can thus encourage companies to moderate the rise in prices, it can monitor or even block certain revenues for a fixed period.

Faced with the difficulty of obtaining satisfactory results with these short-term policy instruments, the public authorities can use longer-term means of combat, mainly by developing price competition, that is to say by encouraging companies to better control their production costs (improvement of competitiveness) and to reduce their profit margins to maintain their market shares.

This policy must be accompanied by measures aimed at controlling and sanctioning anti-competitive practices.

In your opinion, how to ensure the proper functioning of the markets, the fluidity of the distribution circuits and the transparency and regularity of commercial practices and actively fight once morest all speculative manoeuvres?

In order to fight once morest all speculative maneuvers and to ensure the proper functioning of the markets, guarantee the fluidity of distribution circuits, the transparency and regularity of commercial practices, the conditions must be met for a better balance in commercial relations, namely: diagnose the current situation of producers, processors, their employees and consumers, revise the mechanisms of price formation and distribution of margins, encourage the establishment of commercial surfaces in all regions of Tunisia. It is also a question of strengthening controls to put an end to the illegal practices of certain salespeople, give the administration the means to impose administrative sanctions and effectively implement civil and criminal proceedings.