The Montenegrin government in Podgorica has decided to place restrictions on margins for select basic food items in an effort to curb the ongoing rising prices in Montenegro.

Margins refer to the difference between the purchase price and the selling price.

This decision, affecting 66 products, is set to be implemented in September and will remain in effect until the end of January 2025.

As a result, citizens will be able to purchase milk, cheese, pork, beef, and household chemicals at reduced prices.

Prime Minister Milojko Spajić emphasized the urgency of enforcing price limits ahead of the salary increases in October, stating that “traders should not exploit” the benefits associated with increased wages in Europe and the USA.

The plan outlines an increase in average earnings from 820 to 1,000 euros, funded by lowering pension insurance contributions on these earnings.

Moreover, the anticipated salary hikes are expected to be accompanied by substantial increases.

“Under point one, under point two, I don’t know what they are doing with minimum wages amid such high prices. Because prices will rise, that’s a certainty,” said Biljana from Podgorica in her remarks to Radio Free Europe (RSE).

Food prices have reportedly reached unprecedented levels.

Anka, a pensioner from Podgorica, expresses skepticism about the effectiveness of margin limitations.

“It’s just talk. Reductions may occur on some minor items, but with high prices, there’s hardly any real impact, as some items like olive oil are now forsaken altogether,” she lamented.

Economic analyst Oleg Filipović stated in an interview with RSE that margin limitations may yield short-term results.

“I suspect that the salary increases and the VAT for tourism and services set at 15 percent will likely be absorbed by business owners, resulting in further price hikes,” he noted.

He anticipates that the next wave of price increases will coincide with the implementation of proposed salary increases in October.

“Of course, this won’t be immediate, as I believe our market is negatively affected. However, by mid-year, prices will likely elevate for at least two reasons.

One of those reasons is a psychological effect:

“When salaries increase, coupled with rising bank credit, consumption will surge, leading to price increases over time.”

This marks the fourth occasion that the Black Government has altered margin limits since 2020, yet prices within four major retail chains remain at all-time highs.

Filipović argues that inflation is not solely responsible for the acute and daily increases in prices:

“There is a basic reason behind this: the profit margins of distributors,” Filipović added.

Food Price Increases

Anka points out that her pension has remained stagnant for years, while some products have skyrocketed in price, now costing two to four times what they did just a few years ago.

“I can only spend on necessities. Prices are constantly rising. Compared to last spring or last year, they have surged by 200 to 300 percent,” Anka remarked.

This assertion is supported by a comparative analysis of product prices from 2021 to now.

Catalogs (flyers) from 2021 from one of the leading retail chains in Montenegro, accessible on their websites, reveal that current prices for certain products are up to four times higher.

Actual Prices and Official Statistics

Conversely, statistical data indicates a 43 percent increase in food prices over the past three years.

Analyst Oleg Filipović has expressed deep skepticism regarding the reliability of Montenegro’s official statistics.

“The data collected are often poorly controlled or not controlled at all; it appears that individuals simply write something down and that’s it. Certain product prices have spiked by as much as 300 or 400 percent, and it is evident that primary products are cheaper in Barcelona than in Podgorica,” emphasized Filipović.

He attributed these price spikes primarily to the ongoing war between Russia and Ukraine.

“This has impacted all primary products. However, our prices remain disproportionate, lacking a national strategy for market implementation. Sadly, our institutions are weak,” concluded Filipović.

Government Response

On August 21, Prime Minister Milojko Spajić stated during a press conference that prices in various European markets are, in many cases, lower than those in Montenegro.

He subsequently announced that the government would take action to limit margins.

“We have sought feedback from citizens regarding products, and we will consider a broader range of items,” said Spajić.

He reminded the public that the Minister of Economic Development, Nik Jeljiša, had solicited citizens through social media to send him lists of food items for margin limitation.

The opposition has also been scrutinizing the price disparity between Montenegro and Europe.

The spokesperson for the opposition Democratic Party of Socialists, Mihailo Andjusić, pointed out that prices in Montenegrin stores are currently 20 to 40 percent higher than in major European cities.

He questioned the logic behind the pricing of items such as a jar of honey costing 22.49 euros, a 220 gram chocolate bar priced at 7.99 euros, and Nutella cream exceeding 8 euros.

Citizens Express Alarming Conditions

The rapid and relentless price growth troubles RSE’s Podgorica resident Olja, a mother of three, who mentioned while shopping for breakfast items.

“If this trend continues, we will face severe issues soon.”

In response to RSE’s claim that the government has merely instituted margin limits, she stressed that these measures have not resulted in any notable decrease in prices thus far.

“My family and I have yet to feel any tangible impact from the margin limits; if anything, it’s the opposite.”

Olja expressed frequent shock at the rising costs.

“I’ve reviewed my bills as well as those from households that shouldn’t contain mistakes. Yet, it’s unfortunate that people are forced to endure such prices,” she lamented.

Sociologist Ana, shocked by the current situation, questioned how citizens have been so passive.

“It appears to me that Montenegrins have never been so calm and accepting, despite the alarming state of affairs.”

She wondered why citizens remain silent:

“No one is reacting. It’s as if we are all in individual bubbles, discussing issues without confronting the essential problems. We’ve become, it seems, afraid.”

Filipović: Market Control is Essential

Filipović argues that market regulation by the government is imperative and can be approached in two ways.

One method includes creating stock reserves and direct state intervention.

“The other involves establishing conditions that encourage new distribution chains that will avoid collusion. This could initiate competitive pricing against existing distributors,” Filipović concluded.

Business Community Opposes Margin Restrictions

The government’s decision has met with resistance from the Chamber of Commerce and the Union of Employers in Montenegro.

The Union opposes the margin restrictions, stating they were implemented without prior consultation with the business community, who were informed exclusively through media outlets.

“We have received no communication from the ministry regarding these planned measures, nor have we been formally invited to discussions about this issue,” they asserted.

The Chamber of Commerce has reiterated that they were not included in discussions surrounding these margin limitations.

They emphasized that such decisions could adversely affect not just retailers but all businesses across the supply chain.