Food prices generally tend to go down in August. The pleasing thing for many households is that it is now doing so more than usual, Statistics Norway’s consumer price index shows.
According to Torbjörn Isaksson, chief analyst at Nordea, this is because costs associated with food production have fallen over the past year, ranging from fertilizers to grain prices. Perhaps the biggest factor is the falling price of energy.
“The energy price not only affects farmers’ costs for driving tractors in the fields, but also transport of ready-made food and packaging and things like that,” says Torbjörn Isaksson.
Weak price increase in 2024
Since August last year, the prices of food and non-alcoholic beverages have risen by nine percent. In the same period the year before, the price increase was 14 percent.
Continued energy price declines could lead to food prices falling further. According to Nordea’s forecast, however, it is more likely that food prices will stabilize during the autumn and beyond.
“It is not certain that food prices will fall, but if they stabilize, it means that food price inflation will go down,” says Torbjörn Isaksson.
In practice, stabilization means that food prices continue to rise, but at a slower and more normal pace. Both Nordea and HUI Research predict a weak price rise next year, between 1-2 percent compared to 2023.
But even if the world market price for food goes down and food inflation falls, it does not mean that it will appear on Swedish store shelves, says Joakim Wirén, analyst at HUI Research.
— The level that is here now is here to stay, because there are quite a few worrying factors that speak in the wrong direction for food prices. The price of diesel, heating costs, rental prices, interest rates – not much of it looks better now than before, says Joakim Wirén.
Swedish krona worries
Despite the fact that, in other words, the peak may have been reached, it is still a concern for many households, notes Torbjörn Isaksson.
— Because it generally means that food prices are established at a higher level, so it will take a while before purchasing power catches up. It is both good and bad news that it is stabilizing, he says.
However, some clouds of worry still remain in the sky. One is the war in Ukraine and its impact on grain prices, another is the summer’s extreme weather in various places which affects a range of products, such as the olive oil from Greece.
Most troubling according to both Torbjörn Isaksson and Joakim Wirén is the continued weak Swedish krona. Even if a food is produced in Sweden and sold in Sweden, it is affected by the global market.
— The Riksbank’s goal is to reverse the weak krone exchange rate. It can happen and in the long run it will help inflation, but it may not be something you should count on that will bring down the prices on the shelf in the near future, says Joakim Wirén.