Words: Shamim de Brún
If you thought the inflation woes were over, think again. While experts suggest that some aspects of inflation may cool in the coming months, grocery prices are not expected to follow suit any time soon.
Ireland’s food inflation hit a record high of 16.4 per cent in the three months to the middle of February, according to figures from Kantar.
According to this Sunday Business Post Article: Michael Wallace, the UCD professor of food economics, believes the peak is nearing in this current bout of food price inflation. However, he said that several risks to food inflation remain, including labour costs, which have increased quite sharply.
Shrinkflation is another common trend that’s becoming increasingly popular. The UK’s Office for National Statistics found that over 2,520 products shrank in size between January 2012 and June 2017. The majority of the products that experienced size changes were food products. The range of products impacted by shrinkflation includes biscuits and toilet paper.
Ireland is not an outlier when it comes to increasing food inflation. The annual rate of food inflation in the Eurozone was 15.4 per cent in March, according to Eurostat. In Britain, annual food inflation hit a record high of 15 per cent last month. So, increasing interest rates have traditionally been a way to combat inflation. But the inflation issues that are currently dominating the landscape have been impacted by a war in Europe and a global pandemic.
It’s easy to blame Russia’s invasion of Ukraine for the rising prices. But it doesn’t tell the whole story behind the current levels of inflation. Even wth that economists couldn’t predict high double-digit increase in the annual rate of food prices that emerged. It is quite an extraordinary set of circumstances.