Although the standard of living in Montenegro is much lower than in the countries of the European Union, this summer it is noticeable that the prices of certain products in Montenegrin markets are much higher.
Some types of meat, milk or flour are cheaper in Brussels or Barcelona than in Podgorica. It testifies to the fact that citizens go to neighboring countries for groceries. If the trend of rising prices continues, analysts warn, social unrest may break out.
Traders justify the growing prices with the tourist season
Economic analyst Predrag Zečević points out that the only reason for the “wild” prices in Montenegrin markets is the greed of traders and the extra profit they make.
“Owners of megamarket chains in Montenegro used the time until a new government was formed, and the government has been in technical mandate for more than a year, and raised prices in markets beyond all expectations, justifying the need for the tourist season. Prices in Montenegrin markets are higher than prices in tourist centers throughout Europe. I will illustrate it with an example from Barcelona, which is the most expensive Spanish city. In Barcelona, a liter of bottled water costs 23 cents, in Montenegrin markets from 60 to 70 cents, so it is three times more expensive. Traders in Montenegro are concerned about the tax policy, because the tax on extra profit has allegedly been increased from nine to 15 percent, and VAT is 21 percent. But if you compare with the taxes in Barcelona, it is a lower tax rate, because the extra profit tax in Barcelona is 26 percent, and here it is 15 percent, and the VAT is the same 21 percent. That is why the new Montenegrin government, if it wants to prevent social unrest, must tax extra profits more precisely. I remind you that many EU countries taxed the extra profit of companies from their country that took advantage of the Ukrainian crisis to earn extra money,” says Zečević.
How much does the shopping basket cost?
Our interlocutor points out that it is true that fuel prices in Montenegro have been increased 11 times this year, but that fuel is imported. About 60 percent of the selling price of fuel is excise duty, and the state has reduced these excise duties several times so that fuel price increases would not be enormous.
“The problem is that the state fills the budget with 120 to 150 million euros per year from fuel excises, and pensions, salaries in state-owned companies, and social benefits are paid out of that money. “In order for the state to be able to intervene more successfully in the fuel market, it should form strategic reserves of oil, and use this resource to act when fuel prices rise beyond expectations,” Zečević believes.
He points out that the consumer basket for a family of four in Montenegro, according to his estimation, is around 2,000 euros.
