Food prices unlikely to fall

The destruction of the European economy

Published 26 August 2023
- By Editorial Staff
It will be a long wait for those waiting for food prices to fall.

According to the latest economic report from the Swedish Food Federation, sales, profitability and costs continue to fall. There is also every indication that food prices will remain at historically high levels in the future.

According to the report, sales of food produced in Sweden for the second quarter of the year ended with an index of 29 – where 50 is a neutral development – and this is the weakest result measured in the 14 years that data has been collected from the country’s food producers.

From a pure cost perspective, there is very little evidence of a broad and sustained decline in food prices. My assessment is that the higher price levels we are now experiencing will continue for the time being, says Carl Eckerdal, chief economist at the Swedish Food Federation, in a press release.

Virtually everything is becoming more expensive for Swedish food manufacturers, especially the purchase of raw materials, transport, electricity and gas. Seven out of ten companies believe that the weak krona is having a negative or very negative impact on their business.

One might have thought that the disadvantages of a weak krona at home would be offset by advantages in the export market. Unfortunately, this does not seem to be the case. 60% of our exporting members do not feel that the low value of the krona has contributed positively to sales in the export market over the past year. Exports also continued to decline in the second quarter of this year, Eckerdal continues.

In the second quarter of this year, only one in five member companies had covered their cost increases for the most recently sold product the other four in five companies had not managed to compensate for the skyrocketing costs.

According to the trade association, producers will have to raise prices even more than they already have, and there are many signs that food prices “will remain at historically high levels.

– Increasingly extreme weather conditions and a still growing global population are two macro-trends that will keep food commodity costs high in the long term. For Sweden, the situation is exacerbated by the ever-declining value of the krona. Under these conditions, I think it is unlikely that food prices will return to the levels seen before Russia’s invasion of Ukraine, let alone before the pandemic, adds the Chief Economist.

 

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