Poland is selling up to 1,000 tonnes (1,102 metric tons) of its frozen butter reserves to tamp down rising prices ahead of May’s presidential election.
The government’s Strategic Reserves Agency announced the butter auction on Tuesday, citing significant increases in butter prices worldwide due to a shortage of milk.
“This emergency action… should help stabilize butter prices on the market,” the agency said, according to a report by CNN affiliate TVN24, a local commercial news channel.
The agency said it would sell the unsalted frozen spread to companies in blocks of 25 kilograms, for the minimum price of 28.38 zloty ($7) per kilo.
That is well below the prices at Biedronka, one of the largest supermarket chains in Poland. The retailer sells fresh butter for between 39.90 and 49.95 zloty ($9.84-$12.32), depending on the brand, according to its website. However, the final sales price at auction may be higher than the reserve price.
It is not unheard of for governments to tap emergency reserves to increase supply and reduce prices. While such reserves are typically dominated by foreign currencies or commodities such as oil and gold, some countries are stockpiling products considered important to local diets. In recent years, for example, China has drawn on its strategic pork reserves and Canada has released supplies of maple syrup due to shortages.
In Poland, the skyrocketing price of butter has become symbolic of broader pressure on the cost of living. Rafał Trzaskowski, the presidential candidate of Prime Minister Donald Tusk’s ruling party, recently accused Poland’s central bank of mismanaging inflation and offered to send the governor some butter as proof, the Financial Times reported.
Meanwhile, earlier this month, Jarosław Kaczyński, leader of the right-wing opposition Law and Justice party, posted a photo on
“The current government is trying to intervene ahead of the elections,” Rafał Benecki, chief economist at ING Bank Śląski in Poland, said of the butter sales.
Year-on-year inflation in Poland stood at 3.9% in November, significantly above the equivalent rate in the European Union, official statistics showed on Wednesday. According to the national inflation measure, prices rose even more last month, by 4.7%.
That’s still well below the peak of 18.4% reached in February last year, but it’s an issue that studies show is weighing on household spending, Benecki told CNN. And while retail prices for butter are about 20% higher than last year, wholesale prices are up 50%, signaling even higher prices for consumers, he added.
