Food Prices: Updated Jan. 15, 2024

 

Hold the olive oil! Prices of some basic European foodstuffs keep skyrocketing

Article Source: https://mainichi.jp/english/articles/20231105/p2g/00m/0bu/007000c

Article:

BRUSSELS (AP) -- These days, think twice before you lavishly ladle olive oil onto your pasta, salad or crusty bread.

Olive oil, a daily staple of Mediterranean cuisine and the life of many a salad throughout Europe, is experiencing a staggering rise in price. It's a prime example of how food still outruns overall inflation in the European Union.

Ideas:

It seems prices, globally, keep increasing, or are at this writing. But for many years Japanese companies were reluctant to increase prices as they feared they would lose a significant number of customers.

But as inflation continues increasing, Japanese companies now have no choice as their profits margins continue to shrink.

But then again, inflation is very much an individual situation, as maybe some consumers might not worry about it and or still buy their favorite products.

But for the most part, inflation is causing major concerns among households in Japan, and in 2024 it might still be continuing.

Article:

Olive oil has increased by about 75% since January 2021, dwarfing overall annual inflation that has already been considered unusually high over the past few years and even stood at 11.5% in October last year. And much of the food inflation has come over the past two years alone.

In Spain, the world's biggest olive oil producer, prices jumped 53% in August compared to the previous year and a massive 115% since August 2021.

Apart from olive oil, "potato prices were also on a staggering rise," according to EU statistical agency Eurostat. "Since January 2021, prices for potatoes increased by 53% in September 2023.

Ideas:

It seems maybe the EU has been more experiencing higher inflation than Japan or even the US, which was at 6% for inflation around 2022, while Japan might be around 4% depending on which metric you look at.

In Japan, potatoes, while used in curry and other meals, are not as popular as in the US or the EU, but most likely potato prices in Japan too has increased.

For the good of consumers/households, maybe the EU doesn't use price controls to keep prices down and or maybe they just let prices increase or decrease naturally.

Most likely, consumers in the EU, have looked for substitutes, if possible, because of the high inflation on many food products.

Article:

And if high- and middle-income families can shrug off such increases relatively easily, it becomes an ever increasing burden for poorer families, many of which have been unable to even match an increase of their wages to the overall inflation index.

"By contrast," said the European Trade Union Confederation, or ETUC, "nominal wages have increased by 11% in the EU," making sure that gap keeps on increasing.

"Wages are still failing to keep up with the cost of the most basic food stuffs, including for workers in the agriculture sector itself, forcing more and more working people to rely on foodbanks," said Esther Lynch, the union's general-secretary.

Ideas:

It certainly feels like some kind of recession in the EU as families have to rely on foodbanks to get by.

Again, in Japan, like everywhere, the lower income groups, use more of their income on food than the higher income groups. And the higher income groups, again, probably don't notice or think about inflation too much, unless a product they like has increased a lot in price.

Wages, for many years, didn't increase that much, which contributed to a period of deflation in Japan or even stagnation.

In April of 2023, many large companies gave wage increases on average of 3.5%, while many small and mid size companies didn't increase wages.

So maybe around 70% percent of Japanese wage earners might not have received a wage increase, as most wage earners don't work for large companies in Japan.

Article:

Annual inflation fell sharply to 2.9% in October, its lowest in more than two years, but food inflation still stood at 7.5%.

Grocery prices have risen more sharply in Europe than in other advanced economies -- from the U.S. to Japan -- driven by higher energy and labor costs and the impact of Russia's war in Ukraine. That is even though costs for food commodities have fallen for months.

Ideas:

So annual inflation was at 2.9% while food inflation was at 7.5%, which is the most important inflation for Japanese households, and for the lower income groups the most significant inflation.

Again, most likely, the lower income groups have to look for substitutes for the higher priced products they normally buy.

The global economy is very much interconnected these days and what happens in the EU, certainly has some kind of impact in Asia and Japan.

And as Japan is resource poor country, meaning it has to import much of what it needs, higher prices, globally, might be higher in Japan, as they have to import much of what they need.

Article:

Even if ETUC blames profiteering of big agroindustry in times of crisis, the olive oil sector has faced its own challenges.

In Spain, for example, farmers and experts primarily blame the nearly two-year drought, higher temperatures affecting flowering and inflation affecting fertilizer prices. Spain's Agriculture Ministry said that it expects olive oil production for the 2023-24 campaign to be nearly 35% down on average production for the past four years.

Ideas:

Unfortunately, there is always some for of profiteering, whenever companies see a legitimate reason to increase prices, even if they don't need to do it.

Of course whether and and the growing seasons always are in play with regard to prices. If the growing season is good, with an oversupply, there might be lower prices. On the other hand, if the growing season, was not so good with a supply shortage, then mostly likely there will be higher prices for the commodities.

At Spain olive oil is used in most every country in the world, Spain olive oil will have higher prices for now and the future.

Which means for Japan, as they have to import the product and the currency exchange rate is weak, it means olive oil from Spain will cost even more in Japan.

Have a nice day and be safe!