- Bank of Spain Food will rise another 4% in 2024 and energy by 19.5%
Spanish farmers and ranchers raised sales prices by 16.2% year-on-year in the second quarter of the year, the third most pronounced increase in the European Union, despite the fact that the inputs they need in their production process became cheaper by 8% year-on-year, according to data published on Tuesday by Eurostat.
This means that although Spain is the ninth country in which the costs of goods used in agricultural production (fertilizers, electricity, fuels, feed, etc.) fell, our country was the third that most increased the price charged by farm workers at the door of their farm, something that the community statistics office blames on drought suffered this year. In fact, the two countries that registered increases in agricultural prices higher than Spain were Portugal (where they became more expensive by 21.8%) and Greece (+20.9%), also very affected by extreme weather conditions, while on average in the EU the increase was 2.4%.
This is the increase in prices at origin, to which must be added the increase that has occurred in each of the links in the chain until the product reaches the final consumer. Since there is a temporary lag from the time the agricultural product leaves the field until it is bought in the supermarket, it is possible that this price increase reaches the customer later.
Although a year-on-year increase of 16.8% is a considerable increase over the previous year,inflation of agricultural products has been moderating in recent quarters: between January and March of this year they were 33.2% more expensive than in the same period of the previous year; in the fourth quarter of 2022 they rose by 26.1%; in the third, 34.4 per cent; in the second, 18.8%, and we must go back to the first quarter of 2022 to find a lower decrease than the current one (of 15.6%).
The agricultural products in which Spain has registered a price increase higher than the European average have been citrus fruits, which have become more expensive by 128.7% compared to the previous year, an increase only surpassed by that experienced in Italy (141.2%); olive oil, which from April to June accumulated an increase of 69.7% year-on-year, only surpassed by that experienced in Portugal (+72%); or milk, which has risen at origin by 30.4%, the second largest increase after that registered in Greece (31.7%).
Also noteworthy in Spain are the rise in potatoes (49.5%), eggs (37.7%) and pork (+26.8%).
First cost reduction since 2020
These increases have occurred despite the fact that the costs of farmers and ranchers fell in the second quarter for the first time since the pandemic. In fact, Spain is among the countries in which some goods such as electricity have fallen the most, with a decrease of 48.5%, only surpassed by the Netherlands (51.01%); or veterinary expenditure, which has increased by 2.5%, the fifth most moderate increase in the EU.
Other inputs such as fertilisers fell in the second quarter by 19% year-on-year, while feed became cheaper by 20%, although in other EU countries the decline has been greater.
Although their costs were lower than they were a year ago, the drop in production caused by the drought has led farm workers to raise their price and charge the product much more expensive than last year.
Since the pandemic, food has accumulated an increase of 22.8% until 2022, to which we must add the expected increase of 11% for this year and additional price increases in 2024 and 2025, which the Bank of Spain places at 4% and 2.4%, respectively, with a significant upside risk if weather conditions worsen. These increases mainly affect low incomes, since they allocate a greater proportion of their consumption to food.
- European Union