A consumer added meatballs to their shopping cart in a Lidl supermarket in Espoo on 4 January 2024. Pellervo Economic Research (PTT) expects food production and retail sales to increase this year after two years of decline. (Vesa Moilanen – Lehtikuva)
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FOOD PRICES in Finland have become clearly less volatile, indicates an agriculture and food industry forecast published by Pellervo Economic Research (PTT).
PTT on Tuesday reported that it expects food prices to decline by an average of 0.3 per cent this year – in part, as a consequence of the levelling out of increases in food production costs – but increase by an average of 1.0 per cent next year.
“[The decline in production costs] is visible clearly in the dairy sector, and has also been passed on to consumer prices: the prices of dairy products will decrease more than the prices of meat products this year. No price drops will be seen in the bread and cereal product category,” the research institute wrote.
Food prices, it added, have already decreased by a couple of per cent since peaking in March 2023.
The upward pressure on food prices persists, though. Both food producers and retailers are faced with wage pressures, and extreme weather events continue to drive up prices for products such as cocoa, coffee and orange juice. PTT pointed out that the climate crisis will become an even greater determining factor for food prices in the future.
The projected increase in food prices next year can also be attributed to the value-added tax on candy and chocolate rising from 14 to 25.5 per cent on 1 June 2025. PTT said the tax hike, if passed on fully to consumers, would result in a 10-per-cent increase in the consumer prices of candy and chocolate.
The growth outlook for the food industry is also clouded by risks associated with global trade and uncertain demand outlook.
“Food markets are adapting to the new balance and higher prices after the dramatic changes witnessed in recent years. On the other hand, risks associated with exports to China, for example, have increased,” Päivi Kujala, a senior agricultural economist at PTT, said in a press release on Tuesday.
PTT stated that it expects the purchasing power of consumers to recover gradually, supporting an expected up-tick in food production and retail sales after two years of decline. The outlook is uncertain, though, because consumers remain pessimistic about the economy and the recovery of their purchasing power may be curtailed by the value-added tax hike that came into force on 1 September.
Entrepreneurial income in agriculture is expected to grow neither this year nor next year because consumer prices will fall more than the prices of production inputs, the research centre said.
Aleksi Teivainen – HT
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Source: www.helsinkitimes.fi
