Poles Announce Sharp Increases in Food Prices

The Polish government, less than a week after backing down from planned consumer price hikes, announced Friday that major price increases for bread, flour, milk and seven other basic food items will take effect Monday.

In an announcement broadcast Friday night by state radio and television, the government disclosed that prices on these items will rise an average of 35% and that rationing of flour and most grain products, imposed in 1981, is also to be lifted Monday.

The price of meat is to rise by 10% to 15%, but the official statement left unclear when this would happen. It said that still other increases are to be postponed until April and June.

‘Social Consultations’

The announced price increases correspond to the second of three proposals that the government published in January for what it called “social consultations” with the Polish public. In response, the outlawed Solidarity trade union threatened to stage a 15-minute nationwide strike this week unless the government backed down.

Poland’s new official trade unions had also rejected all three alternative sets of increases, saying they would only serve to lower the country’s standard of living. The new unions, contemptuous of Solidarity but echoing its position, called instead for better management of the centrally directed economy to bring prices into line with production costs.

According to official figures, Polish consumers now pay only about half of what it costs to produce most of the food they eat. Massive government subsidies, which drain money from elsewhere in the economy, pay the other half of Poland’s grocery bills. Despite this, however, a typical Polish family now spends 50% to 70% of its income on food.

After the government agreed Monday to reconsider its price increases, Solidarity leader Lech Walesa hailed the retreat as a “tactical concession” to the outlawed union and joined with other Solidarity figures in calling off the strike. Walesa said it was nonetheless clear that the government would raise food prices by some degree, and he said that the strike weapon would be held in reserve for use “if necessary.”

No Quick Reaction

There was no immediate reaction Friday night from Solidarity or the official unions to the announcement of new prices. Historically, food prices have been postwar Poland’s most explosive issue. Sharp increases touched off worker riots in 1970 and 1976 and spawned the strikes in 1980 that gave birth to Solidarity.

Premier Wojciech Jaruzelski’s government managed to defuse the strike threat this time without retreating as far as many had assumed it would.

The price of flour and rice is to rise Monday by 41%, sugar by 44%, bread by 30%, milk by 11% and cream by 24%. Cooking oils will go up by an average of 10%, tea by 75%, ocean fish by 10% to 15% and semolina grain by 50%.

As of Monday, Poles will pay the equivalent of about 10 cents a pound for bread and 13 cents for a quart of milk. The average worker’s income is $123 a month.

Increases in the price of electricity and of the coal used to heat many Polish homes will be postponed until April, and coal will go up only 20%, not the 30% originally proposed. At the same time, the government said it would postpone until June previously planned hikes averaging 47% in the price of butter and other edible fats.

Implications for Future

Even so, the government contends, the cost of all these items will still remain below their cost of production, implying the need for future price increases.

The announcement said that steps will be taken to cushion the blow of new prices on low-income families and pensioners by raising some retirement and child-care benefits, but the scope of these increases was not clear. Also left unclear was the overall effect of the price rise on retail prices, which the government had originally said should grow by 12% to 13% this year.

Rationing of meat, butter, fats, sugar, and chocolate will remain in effect. Gasoline is also rationed.

Polish shoppers were given an oblique hint early Friday that food prices were about to go up when a government edict, published in the morning newspapers, ordered shops not to honor March ration coupons for flour and sugar until Monday. This apparently was to keep people from buying all they could on the last day of lower prices.

The edict brought angry reactions from some Warsaw shoppers.

One woman shouted at a clerk in a downtown food store, “This scheme didn’t come from a Catholic head. This is the devil’s work.”

By announcing the price increases on a Friday evening at the end of the workweek, the government reduced the risk of spontaneous work stoppages and gained 48 hours in which tempers can cool.

A longtime Warsaw resident said, “They’re counting on workers drinking a little vodka over the weekend, talking about it, venting some steam at their wives. Come Monday, they’ll have calmed down a bit.”