Brussels, Sept 17 - Europe's farm chief warned food retailers on Wednesday that regulators are watching their pricing now that the cost of staple commodities such as cereals has come down significantly from recent surges.
Latest European Commission data show that while average EU cereals and dairy commodity prices fell sharply in the last few months, consumer food prices have not fallen in tandem.
"I'm a bit surprised we haven't yet seen the decrease in prices filter down to the retail sector," EU Agriculture Commissioner Mariann Fischer Boel told a news conference.
"When prices go down, there seems to be a slower reaction. I expect you should see a drop in prices in the retail sector. We will keep an eye on this -- and competition authorities will as well," she said, in a veiled warning to large retailers.
The European Union executive has no power to regulate retail prices but it can investigate and punish price-fixing cartels.
It was not the first time Fischer Boel has complained that supermarkets may be making European consumers pay over the odds for staples such as bread and milk due to higher international grain and dairy markets.
Market prices for soft wheat and barley were down 12.7 and 13.9 percent respectively in August compared with the same month in 2007, Commission data showed.
But at the retail end, consumer food prices were at levels significantly higher than one year ago -- up 8.3 percent for food in general and 12.3 percent for bread and cereals-based products in July, the latest month for which there are figures.
"I do not think the price increases have ever been justified, since wheat accounts for less than 10 percent of the final product," Fischer Boel said, referring to a loaf of bread. "My fear now is that you see cereal prices dropping, (but then) if you do not see a reaction in agricultural products, if there is another increase, it is to the detriment of poor people," she told the news conference.
Earlier, Fischer Boel proposed raising the budget for an EU scheme to provide food for millions of Europe's poor, to help cushion the impact of higher food prices.