When I lived in Europe food prices for most basics especially meat, fish, fruit and veg were far higher than they were in Australia, for exactly the reason the article argues prices are lower - government intervention. The EU subsidised inefficient producers and added greatly to the cost of food for consumers. It still does, though not as badly as it did then.

In recent months Australia’s exchange rate reached an all-time high against the euro and a 29-year high against the US$. Our currency is overvalued, and that contributes to apparently lower prices overseas. The Aussie dollar is currently buying about 22% more euro than its long-term average. No wonder things look cheap.

I would like to demistify some myths.. when Yabbi says that "in France, things like baguettes and croissants are commodity items, sold in huge volumes. Not so in Australia,.." this is not really what happens. Most of the breads/croissants/and sweet breads are retailed in France at the local bakeries, who are catering for their local customers and not in huge volume.
You also propose that real estate prices could be a hidden driver for higher prices. The price of real estate in Paris is as dear as it is in Sydney, so I don't think it would impact so significantly.

You are right when saying fresh food like fruits or vegetables originate from Southern Europe, North Africa and South America (this is globalisation for you!) but still it does not explain the price differences for made/processed foods.

I really think that on the supply side market concentration/power has really set the high price levels, but also on the demand side, us consumers, have a responsibility to keep the middle man honnest.

Bakers Delight (just to give an example) is having a lot of fun with us. Their price increases are hardly justified: - in April the traditional small white loaf jumped from $2.50 from $2.70, 8% what for? The consumer may think it is only 20 cents but the franchised bakery has all of the sudden increased its revenue by 8%! And when they sell a small baguette for $3.80 that makes me very angry - not hungry!

Brigit asks a very good question which has not been satisfactorily answered. I have been living in France since November 2010. Most things are significantly cheaper here. Yes the strong dollar has had an effect, but in France there is a value-added tax of 5.5% on food, versus zero in Australia. I believe Australian prices are unacceptably high in comparison and yes, it's true, quality is generally much higher here. Perhaps one reason is the proliferation of local markets in France, where producers sell direct to the public. We can find a different market open nearby every day of the week. With limited distribution costs and a focus on buying and eating what is fresh and local, prices are low. This has the benefit of forcing the supermarkets to trim their prices to match. In Australia consumers have been led to buy only in the two major supermarket chains (no real competition when they choose not to) and they expect to buy the same food items year-round, which have to be transported long distances for much of the year. Our fledgling farmers markets in Australia are often for specialist producers to sell at much higher prices. There are no French-style markets in Australia. It seems the local market system keeps the bastards honest.

Hello Principles,

It is an interesting point, if I got it right: the direct to consumer link (through the weekly food markets) is keeping price levels down.

But don't you think that the French consumer is also more sensitive to any price fluctuations? There is on-going debate in France about price inflation and buying power, so does it make the consumer more discerning?
Food prices are monitored through a price observatory (l'Observatoire des Prix) showing the price transformation from farm gate to retail shelf. Could it be that this 'transparency' although used as a regulatory measure, help the consumer in the end?

I always find it somewhat odd to see the term Delicatessen. What is portrayed to be as some kind of special food & has a price to match it is merely everyday food in other countries. It would be ok to pay extra if this food were imported but it is not. It is produced here so why are we made to pay for a myth ? Also, a lot of lesser quality food is not necessarily cheaper than quality food. In far Nth Qld communities some shops charge $16 for a small Presto Salami or $11 for 500 gr cheese. Ordinary white bread is $4.90 or $ 6.20 for a doz eggs. A 150 gr Nescafe $16.40 etc. The shop proprietors always claim the cost of freight as the reason but other shops can do it for quite a lot less.
Fuel is $1.98. How can they get away with these high prices ?

*are retailed in France at the local bakeries, who are catering for their local customers and not in huge volume.*

Ah Salome, but it is in huge volumes and anything produced in
volume, even for a local bakery, is far cheaper to make and has
alot more competition, then gourmet items, produced in small runs.

In Central Europe good food is the standard, in Australia our
tradition was to cook more like the British, so it is not.
So in Australia you pay extra for quality, but you can have a
cheap Chiko roll or pie just about anywhere.

Baguettes are not yet a commodity item in Australia, but if I go
to the Vietnamese hot bread shop in a country town near me, their
price is incredibly competitive and the place is busy all day.

Bakers Delight would price to what the market will bear, they are
a franchise.

Sydney real estate was recently quoted as the third most expensive
in the world, above Paris and the rest. But as somebody pointed out,
exchange rates play a big role in all of this.

Food is still cheap in Australia, if you shop around. Sadly what
people seem to have done is what they save on food, they plough
into expensive real estate and there we are amongst the most
expensive in the world.

Our labour laws don't help much either. When shopkeepers have to
pay double time etc, plus all the rest of the required loadings,
no doubt they want to recoup their costs. My Vietnamese bakery
avoids all that, by having the whole family chip in and pays low
rent in a country town, as distinct from Yuppy Sydney rents.