In 2025, food prices in Ukraine will approach world indicators. Ukrainians spend a much larger share of their family budget on food than people in Europe.
Oleh Pendzyn, an expert from the Economic Discussion Club, explained on Ukrainian Radio why this situation has arisen.
According to the expert, the National Bank of Ukraine has recognized that food prices in Ukraine have approached world prices.
"Our food basket was more expensive in some items than in Poland 5-6 years ago. First, the value-added tax in Ukraine on products is 20%, and in Europe - 4-5%. By setting a lower value-added tax on food products than on industrial products, the state thus makes food products cheaper for its own population. Secondly, 70% of the income of a European farmer is made up of subsidies. When there are subsidies, the product becomes cheaper. The state, subsidizing the sale of products, pays the population extra so that the products are cheaper," said Pendzyn.
He explained that comparing the share of expenditures in the family budget for food in Ukraine and in the EU, a Ukrainian family spends about 40% on food products, and a European family - from 12% to 18%.
"The richer we are, the more we eat meat and dairy products. And the poorer we are, the more we eat bread and potatoes. That is, the lower the income level of the population, the more we use the cheap segment of the food basket. According to a study at the beginning of the year, 46% of Ukrainians confirmed that they began to look for cheap low-quality products to make ends meet," the expert emphasized.
According to Pendzyn, the decline in real incomes of the population leads to the fact that the conditional middle class, which has never saved on products, begins to actively look for a cheaper segment.
"And in that cheap segment, there were already low-income segments of the population. Accordingly, there is a double demand in the cheap segment of the food basket. On the other hand, in the expensive segment (dairy products, meat), demand has decreased significantly. And therefore, we have an interesting trend, when, with a general increase in the price of the food basket by 20%, cheap products have increased in price more than expensive ones," he said.
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