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Quality and price are the critical determinants for consumers in making purchasing decisions. A firm that can provide an appropriate array of goods and services at a lower price  than  its competitors will  have  a competitive advantage that  should result in an increase in business and enhance financial returns. This article focuses on the consumer food price developments during the Slovenian adjustments towards the European Union membership, and the Euro adoption by the followed increased in consumer prices, and the current economic and financial crises. The empirical analysis on the determinants of the consumer food prices is based on the monthly statistical data, which were obtained from the Statistical Office of the Republic of Slovenia. Agricultural producers’ prices during the period examined have increased substantially less than the consumer agro-food prices. During the analyzed period, there has been substantial increase in the energy prices as well as in agricultural wages. By using the principal component analyses, the two common components are identified: 1) general level of prices and wages in agriculture, and 2) the input  material prices, funds for agriculture, weather conditions, and output prices of crops in agriculture, but the mitigating role of the Euro adoption. The first common component explains 48.4% of the total variance of the analyzed variables. The second common component additionally explains 13.7% of the total variance. By using the multiple regression analysis we found that the consumer food prices are positively and significantly associated with  the  agricultural wages, with  the  agricultural producer prices, with  the  prices of municipal services, energy prices, and  the  prices of inputs for  agriculture. We  also  found that  the Euro  adoption had only  the short-term impact on the consumer food  prices, but not on the medium- term. By using the linear trend analysis on the time-series data  we confirm that  during the time  of the high food prices  from April 2007 to May 2008, the consumer food prices  were overshooting above its average level. The highest growth in the consumer food prices was in September 2007. The consumer food price increases were statistically significant between February 2008 and May 2008. During this period the average value of the consumer food  price  index  was  100.45. The economic recession in Slovenia since October 2008 has caused the stabilization and later decline in the consumer food prices. This decline has  been  significant between February and  May  2009. During this period the average value  of the  consumer food  price  index  was  99.75. This result  and  the  later  developments imply that the economic recession has caused the significant decline in the consumer food prices since October 2008. The lowest level in the consumer food price index is recorded by June 2009. During the economic recession the level of productivity (output) and  the demand for most  goods  and  services, including the food  industry, have  declined.

Keywords

Agro-food Chain, Food Prices, Economic Recession, Euro, Slovenia

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