March 6, 2008 / 12:37 PM / 12 years ago

High food prices make hot election issue in Spain

MADRID, March 6 (Reuters) - Ordinary Spaniards are feeling the pinch from rising prices of basic foods and the issue is becoming a hot topic of debate ahead of Sunday’s election.

The conservative opposition is using steep prices in food staples to attack the economic record of Jose Luis Rodriguez Zapatero’s government.

More bad economic news could erode the Socialists’ four-point poll lead by Sunday, analysts say.

“Inflation is out of control. Milk has gone up by 29 percent and chicken is up 10 percent,” Popular Party (PP) leader Mariano Rajoy said in a fiery television debate with Zapatero.

“People buy less these days, or go for price rather than quality,” said stallholder Ivan Rodriguez in Madrid’s Chamberi market as he carefully arranged unsold merchandise at the close of his working day.

Business, he said, was slow in fruit and vegetables, an essential part of the Mediterranean diet.

“We’re getting by, thank God, but things used to be a lot better than this.”

Spain is vulnerable to rocketing world commodity prices as it cannot grow enough grain to meet demand and depends heavily on imports.

Since food has a higher weighting on figures in Spain than in other European countries, food prices count for a lot in the inflation rate of 4.4 percent, the highest of the decade.

The latest Agriculture Ministry estimates show that in the year to February, milk prices rose by 24 percent and chicken by 16 percent.

Dairy and other livestock farmers in Spain, which lacks extensive pastures, have to rely more on costly animal feed made from grain than other European countries.

FARMERS’ VIEW

But farmers deny this is the root cause of rising prices as they have not been able to pass on increased costs in grain, fuel and fertiliser to consumers. They are, however, at a loss to come up with another explanation.

“Costs keep going up but producer prices stay the same or even go down. The numbers just don’t work out,” said a spokesman for farm industry group COAG.

COAG estimates that growing cereal costs Spanish farmers 30 percent more than this time last year.

The Agriculture Ministry estimates that wheat accounts for just 6-10 percent of the final price of bread — a fact that farmers and consumer groups have seized on to say that soaring consumer prices are out of proportion to raw material costs.

Juan Moreno, head of the Spanish Consumers’ Union (UCE), said big retailers, not farmers, were to blame.

“We are very sceptical about the arguments being used to justify price rises, especially in staples,” he said.”

An Economy Ministry spokeswoman declined to comment on the link between raw material cost and final prices, saying the issue was under review by the National Competition Commission.

Whatever the reason, high food prices are hurting ordinary people like Isabel Larroca, a teacher and single mother of one living in the lower middle-class Madrid suburb of Santa Eugenia.

“I was stunned in December when I saw that milk had suddenly gone up 20 cents, and the same with bread and other basics. It’s had a real impact and will be fatal if it goes on,” she said. (Reporting by Martin Roberts; Editing by Richard Balmforth)

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