Spanish government to meet supermarkets, farmers over high food prices

MADRID (Reuters) - Spain's government will meet with food retailers and producers on Wednesday to address stubborn inflation in food prices, Economy Minister Nadia Calvino said on Tuesday.

The government, business associations representing supermarkets such as Mercadona and Carrefour (EPA:CARR) and farming and food processing groups will discuss evolving prices and margins to determine when consumers will be likely to feel the impact of government aid to industry, such as direct and indirect energy and fertilizer subsidies, Calvino told a press conference on Tuesday.

"As has happened in other sectors, sooner or later this drop in costs has to be transferred to final prices and our interest is that this transfer and this drop in food prices become a reality as soon as possible," she said.

Jose Manuel Alvarez, head of ACCOE, a grain producers association, told Reuters last week that falling wholesale prices should already be reflected on supermarket shelves.

"It doesn't seem logical that in a downward context the price doesn't fall," he said. "If the raw material has fallen that should have influenced the price of (cattle feed) and meat."

Juan Roig, chief executive officer of Mercadona, this month said the supermarket was simply passing on higher prices reflected in the supply chain even as the company posted near-record profits.

Year-on-year consumer prices in Spain rose 6% in February, up from 5.9% in January, driven by food prices which rose 16.6%. Processed food registered the highest increase with a 16.8% rise.

The government in January approved 300 million euros ($324.99 million) of subsidies to help farmers face rising fertilizer prices triggered by Russia's invasion of Ukraine, a major producer of agricultural products. It is also subsidising natural gas used to produce electricity.

The transfer of costs in supply chains can take some time to pass through the food chain, according to the Bank of Spain. It expects food prices to continue to rise even after grain prices peaked in July.

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Food prices are causing pain across Europe. Data from market researcher Kantar on Tuesday showed UK grocery price inflation hit a record 17.5% in the four weeks to March 19, the biggest rise in food prices since 1977. Consumers across the European Union paid on average 30% more for eggs in January than a year before, Eurostat data showed last week.

($1 = 0.9231 euros)