Although in the first five months of the year, the revaluations of food items have fallen noticeably, there are some categories where they still run at high rates. In oils and fats, price increases ran at a rate of 39.2%, between January and May, as a result of reduced olive oil production, while at a rate of 11.4%, approximately the same as in 2023, price increases in mineral water continued , in soft drinks and fruit juices, due to Brazil’s drought and the outbreak of diseases in orange trees, with analysts estimating that the country will have its lowest production of orange juice in 36 years this year. With a double-digit rate of 10.3%, the prices of fruits also increased, while fish also moved upwards, and in fact at a higher rate compared to last year.
Energy factor
According to the Bank of Greece’s 2023-2024 Monetary Policy Report, unprocessed food prices moved strongly upward in 2023, possibly due to large increases in energy (gas and oil) and fertilizer prices, which led to the rise in producer prices and consequently consumer prices. Another reason that pushed up the prices of specific food items was the wage cost, which was affected by wage increases, mainly in the lower wage scales.
The processed ones
Similar were and still are the sources of inflation in processed foods. “The main determinants of processed food prices are producer-level prices and international prices of food commodities, which are the main inputs of businesses that process and sell food. The war in Ukraine is estimated to have played a significant role in the increase in international food prices and especially grains,” the BoE points out in its report.
Additional determinants include the climate crisis and extreme weather events, as well as the coronavirus pandemic due to supply chain disruptions and food trade restrictions. In addition, the natural disasters in Thessaly, last September, further increased prices, as shortages were observed in many products. “Given that the climate crisis also entails uncertainty in weather forecasts, it is estimated that in the future there will be greater volatility in the prices of food items,” the report underlines.
What the evidence shows
However, according to data from the Bank of Greece, food inflation in the first five months of the year stood at 5.6% from 11.7% in the whole of 2023, registering a decrease of 52.1%. In fact, for the first time since 2020 in the “dairy and eggs” category, inflation was negative at -0.9%, which means that their prices have started to decrease even marginally. Stabilization trends are shown by bread and cereals, with their prices increasing in the five months by 0.7% from 9.3% the previous year, while the picture is the same in the “coffee, cocoa, tea” category, which ran with rate of 2.1% from 9.5% and despite the fact that both cocoa and coffee recorded historically high prices in the international markets, as the drought hit the major producing countries and the quantities produced were significantly reduced.
THE EVOLUTION OF FOOD INFLATION
| PRODUCTS | 2020 | 2021 | 2022 | 2023 | 2024
(first five months) |
| Food | 1,8% | 1,6% | 12% | 11,7% | 5,6% |
| Bread & Cereal | 0,1% | 0,7% | 13,9% | 9,3% | 0,7% |
| Meats | 1,8% | 1.,3% | 13,3% | 11,9% | 3,7% |
| Fish | -0,3% | 4,5% | 3,4% | 5,8% | 7,5% |
| Dairy & eggs | 1,8% | 0,6% | 16,1% | 14% | -0,9% |
| Oils & fats | -4,5% | 6,5% | 20,7% | 20,3% | 39,2% |
| Fruits | 14,3% | -1,4% | 4,7% | 8,9% | 10,3% |
| Vegetables | -0,1% | 2,1% | 12% | 12% | 6,2% |
| Sugar, chocolates, sweets, ice creams |
-1,1% |
0,5% |
5,1% |
9,3% |
4,4% |
| Other foods | -0,5% | 1,4% | 8,8% | 12% | 3,8% |
| Non-alcoholic beverages |
-2,2% |
-0,3% |
6,7% |
10,9% |
7,5% |
| Coffee, cocoa, tea | -2,4% | 1,6% | 9,3% | 9,5% | 2,1% |
| Mineral water, soft drinks, fruit juices |
-2,2% |
-1,3% |
5,1% |
11,9% |
11,4% |
Source: ELSTAT, processing of data by the Central Bank
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