Poland will be hit hardest by food price inflation

Food prices in agriculture rose 31 percent in 2021 and will rise another 23 percent in 2022 due to overall increases in input costs (fuel, electricity, fertilizer), years of lower yields translating into low inventory levels. Russia's recent invasion of Ukraine has affected not only the supply of basic ingredients needed for food production, such as wheat and oil, but also the price of substitute raw materials that can be obtained from alternative sources.

According to Allianz Trade, the worst is yet to come for European households: retail food prices by no means yet reflect the sharp increase in the price of raw materials needed for food production seen over the past 18 months. Since the beginning of 2021, food and drink producers in the euro area have already raised prices by 14 percent on average, with the strongest price increases among everyday products, while retail food prices have only seen a small correction of 6 percent, meaning that retailers have not yet passed on to retail food prices even half of the price increases charged by food producers. 

"Based on our headline estimate that retailers will pass on to consumers the equivalent of 75 percent of the price increase charged by food producers to date, we have calculated that food price inflation will cost the average European consumer an additional €243 for the same basket of groceries compared to 2021, with estimates ranging €200-250 for the four largest consumer markets in Europe," the report reads.

The highest change in retail prices will occur in Poland and Germany – about 10.6 percent. The EU average is expected to be 9.4 percent.

(WBJ)