this inflation dynamite Shopping cart in spain. Oil prices rose 56 percent since the beginning of 2021, when the general price level of food raw materials began to rise, cereals became 17% more expensive, milk and eggs16% and meat, 10%. The war in Ukraine increased this trend, which brought the annual inflation rate to 10.8% in Spain in July, to the level of only 38 years ago.
“Increasing prices food raw materials This is happening on a global scale consumer prices According to the report ‘The increase in food raw material prices and their transfer to consumer prices in the euro area’ published by Bank of Spain.
The analysis, co-authored by Fructuoso Borrallo, Lucía Cuadro-Sáez and Javier J. Pérez, examines different food groups and finds that price increases are “very common and intense” for all foods. In June, oil prices in the euro area increased by 29%, grain and coffee prices increased by 11% year-on-year. milk and eggs, and meat made around 12%. In the same month, oil prices in Spain increased by 37% compared to the previous year, while prices of cereals, coffee, dairy products and eggs and meat increased by 16%, 11%, 16% and 10%. respectively.
As a result of these dynamics, oil is now 34% more expensive in the euro area since January 2021, while cereals and dairy products and eggs are 12% and 13% more expensive, respectively. “Prices in Spain have increased most markedly since the beginning of 2021”: 56% for oil, 17% for cereals, 16% for dairy and eggs, and 10% for meat.
More weight and additives
As a result, the rise in food raw material prices globally since the beginning of 2021 “affects consumer prices in the Euro Area and Spain and explains a significant part of the increase in inflation in Turkey overall in the last quarters”.
Weight foods in the shopping cart It largely determines the heterogeneous effect of the increase in food raw material prices in different countries. While this weight is 17% in the euro area as a whole, food contributed 0.9 percentage point to the increase in the harmonized consumer price index (HICP) on average over the last three quarters. Weight increased to 22% in Spain and the average contribution was 1.4 percentage points. According to the latest information, which corresponds to June, the contribution of food to the general inflation rate in Spain was 2.9 points, while it was 1.7 points in the Economic and Monetary Union.
The Bank of Spain estimates that a temporary 10% increase in the rate of change in food raw material prices will be reflected in an increase in overall inflation in the Eurozone of the European Union (HICP). about three tenths 12 months later.
According to the study, “The future development of food prices is subject to high uncertainty. Although current estimates from both the World Bank and food futures markets point to a certain downward trend in the coming years, the conflict stemming from the Russian invasion of Ukraine continues,” said the study. This will continue to put upward pressure on prices both directly and indirectly.” An example of this was the first grain shipment from Ukraine to Turkey and then to Lebanon, which affected the fall in wheat prices.
According to the Bank of Spain, on the one hand, these countries are important producers of food raw materials such as grain and their production and export capacities are significantly limited. The conflict, on the other hand, affects the prices of energy and fertilizer, which are two very important resources in the production processes of agricultural activities.
Likewise, with the rise in prices and disruptions in supply from Russia and Ukraine some adverse weather developmentsdirects some countries to ban or restrict the export of certain food raw materials. additional tension global food supply chains with the potential to create very permanent additional increases in international prices.