Italy’s Plan to Cap Price of Face Masks at 50 Cents Has Flopped
Italy’s Plan to Cap Price of Face Masks at 50 Cents Has Flopped
(Bloomberg) -- Italy’s attempt to dictate the price of face masks is backfiring just as the country starts relaxing its lockdown.
On May 3, emergency chief Domenico Arcuri announced that the price of masks would be capped at 0.50 euros (plus 22% value added tax), and that a wide distribution would be ensured thanks to agreements with supermarkets and pharmacies. Some retailers even said they would renounce any markup on their sales.
Arcuri peppered his statement with barbs against “sofa free marketeers” who had said that setting the price was impossible. But reports are now piling up of mask shortages, with distributors reporting that price-controlled ones are hard to come by.
“It’s not my fault,” Arcuri said Tuesday in a press conference. “I struggle to feel guilty about this.”
The flop is troubling as the country slowly restarts its economy and wearing a mask has become compulsory in some areas. It’s a reminder of the risks as states around the world take a bigger a role in the economy, buying shares in troubled companies and propping up companies with public money.
Already on May 6, large retailers warned that inventories were running low, while pharmacies in the southern region of Puglia announced they would stop stocking masks because they couldn’t secure them at a price below 0.50 euros. Consumer association Altroconsumo says that, in major cities, price-capped masks are available only in one pharmacy out of four.
Marco Cossolo, chairman of pharmacists’s association Federfarma, said that stocks of price-controlled face masks were depleted in a day. “The big batches that were supposed to be sent to drugstores are not there,” he said.
Arcuri is on the defensive, blaming distribution networks and pharmacists for the shortages. The government has denied reports that the price cap would be raised to 1.5 euros.
Boosting Production
Italy has also tried to boost its domestic production capacity. On March 24, Arcuri had announced the creation of a consortium of companies that would produce about 14 million masks per week, or around half of the demand of Italy’s hospitals and households.
Time is running out. Demand for face masks is set to increase as Prime Minister Giuseppe Conte considers speeding up Italy’s exit from lockdown, with shops, restaurants and bars opening already from May 18.
©2020 Bloomberg L.P.