Food prices stabilising but yet to fall

I wrote a blog post in March this year “Food price inflation gathers pace” which used inflation data up to February. I concluded that post by noting that “the explanation for the continuing rise in food price inflation is mostly likely down to the lags in transmitting price changes through the food price chain. Food price increases in the past year, though very high, have not fully reflected the increases in prices at primary producer level. As food manufacturers and retailers continue to adjust their prices to these higher input costs, food price inflation is likely to continue at a high level”.

In this post, I bring the story up to date using information up to June 2023. My prediction in March 2023 seems borne out by the data. Food price inflation remains very high but there is evidence that food prices at EU level have stabilised and that we can expect some modest decrease in the coming months.… Read the rest

Overall inflation in the EU shows some tentative signs of moderating in the latest figures for the Harmonised Index of Consumer Prices (HICP) from Eurostat for February 2023. From a peak annual rate of inflation of 11.5% in October 2022, the annual rate fell to 9.9% in February 2023. This is entirely due to a fall in energy costs which also reached their peak in October 2022. Food price inflation, however, continues unabated and increased further in February 2023 to an unheard-of annual rate in recent decades of 19.1%. Unfortunately, this high rate of food price inflation looks set to continue for a further period.

Food price inflation in context

Food prices in the EU have risen dramatically in recent years (in this blog post, food prices include non-alcoholic beverages but exclude alcoholic beverages whose prices have risen at a slightly slower rate). In the EU as a whole food prices were 38% higher in February 2023 relative to the price level in 2015, while the overall price level rose by just 24% during this period.… Read the rest