Petru Chiriac
Businesses have been commenting more on the recent rise in gas prices. Perhaps this reflects crisis fatigue. Or perhaps it’s a sign of greater adaptability to such crises.
At the same time, it’s clear that business owners are discussing this topic among themselves. However, when we asked how businesses are reacting to the rate hikes and what they plan to do about it, the Confederation of Employers’ Associations replied that business owners had not raised this specific issue. Perhaps the reason is that many large enterprises purchase gas on the free market, where prices can vary. Consequently, the impact of gas prices on production costs also varies.
As Logos Press previously reported, Marina Solovyova, program director at the independent think tank Expert Grup, also draws attention to this. “When we talk about the impact of gas prices on business, we must take into account that the tariffs approved by the National Agency for Energy Regulation (NARE) do not apply to all gas consumers, but only to households and small businesses,” she notes. – Large enterprises that consume significant amounts of gas purchase it themselves on the free market, and the cost for them may differ.”
The price of gas will inevitably affect the cost of bread
Nevertheless, it is clear that rising gas prices will affect the cost of end consumer products. This includes bread—the product most in demand by the population—which is therefore particularly sensitive to even a small price increase.
Petru Chiriac, president of “Milina,” one of the country’s largest bakery product manufacturers, confirmed the validity of these assumptions to Logos Press.
“There will definitely be an impact, even though large enterprises purchase gas on the open market, where suppliers can adjust prices to remain competitive,” Petru Chiriac told Logos Press. “But I don’t think their prices will be lower than the rates set for the general public on August 21. Large enterprises will certainly not be able to avoid the increase in gas prices either.”
Specific figures. The company is not yet ready to disclose how this might affect the price of bread. This is because, aside from the cost of gas—which accounts for about 10%—there are many other important factors that influence the price of bread. The budget and tax policy for 2027 has not yet been approved, which means that the final VAT rates for gas and agricultural products are not yet known. The price of bread will also depend on these rates. Once the tax policy is adopted, it will be possible to see all of its components more clearly.
The Issue of Flour Prices
The issue also lies with the price of grain and flour. This is a much more significant factor in the cost of bread than gas, since flour accounts for 30% of the costs in bread production. Although Moldova has had a good wheat harvest this year, prices aren’t falling because farmers’ costs are rising. Plus, licensing grain imports could logically contribute to price increases as well. Therefore, it is difficult to say whether the price of bread will rise and, if so, by how much.
“At the same time, I don’t think anyone will risk raising the price of bread significantly today—at least not the major producers,” continues Petru Chiriac. “Competition in our market is fierce. It helps keep prices at current levels so that companies can maintain and secure their position in the market, even though profit margins are currently minimal compared to previous periods.”
The entrepreneur emphasizes that, as of today, Moldovan bread is the cheapest in Europe and the post-Soviet space. It’s even cheaper than Ukrainian bread. And considering that prices throughout the bread production chain have risen and continue to rise across the board, it’s worth acknowledging that its current price has long been out of step with reality. This is because the cost of grain, flour, and electricity has risen, employers have raised wages, and so on. In other words, a price increase is long overdue.
Petru Chiriac also notes that lessons from the previous crisis—when gas prices were higher than they are today—are helping to sustain production. At that time, Milina managed to lower bread prices by leveraging its sales volume, although stores never supported the manufacturer’s gesture.
“In my opinion, VAT on bread could be eliminated,” the manufacturer remarks. “Although it is a reduced (8%) tax, this measure would be reasonable given rising gas prices; it would help keep prices in check and would provide real assistance to the public.”
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