As we all know, on August 1st, the government's decision to limit the profit margin on a series of essential food products will come into effect.

Retailers have reluctantly adhered to the idea supported by the government. Regardless, they hope that food prices will decrease, sales will increase, and companies will be saved through higher volumes, if not in value. What a joke!

We have previously expressed our skepticism about this solution, but if that's what the stakeholders have decided, so be it. However, will it really happen this way? Definitely not. In a short time, you will see sales plummet even further, consumption will sharply decline, people will turn to extremely cheap food (long live private labels!), and the black market will flourish.

This is because, in their recklessness, the authorities have done nothing for years to improve the economic environment, to heal the market.

Endless handouts, electoral, patronage, social, budgetary, stubborn avoidance of digitizing VAT collection, failure to collect huge debts from state-owned companies, inflated salaries of public sector employees, special pensions, and so many others have put Romania in a situation where the budget deficit may exceed to the point of risking the loss of EU funds. And don't hold too much hope, this possibility is real.

To avoid this situation, the same government decided to revoke certain benefits for three industries (IT, construction, and agro-food industry) and, above all, raise VAT in several areas, including food-related ones, which fall under horeca, a segment of the market that was a significant outlet for processors to sell their production.

All these, and many others, will lead from this autumn to a collapse in people's purchasing power, despite the decrease in inflation, to a further accentuated decline in the standard of living, and as I mentioned before, to a collapse in sales, even in the area of food where interventions were made, as the crisis will spread, by diffusion, to these products as well.

You know how it is? It's like having a toothache. Although the cavity is tiny, your whole head hurts. And it will hurt all of us: the government, farmers, processors, and the population.

So, the idea of lowering prices on some food products is a big lie. Let's be clear: instead of limiting the prices of certain food products, the government should have increased the purchasing power of the population. That's the truth.

Now, the government and companies will face the consequences. As for the population, they will experience the exercise of poverty, and they will cope. But how and for how long? Only the future will answer this question.