Shoppers may need to prepare for high oil prices. Specifically, olive oil prices.
Prices of the cooking oil are already at record levels, thanks to a drought last year in major producers like Spain and Italy, leading to a 60% increase since last June, according to the Financial Times.
The lack of rainfall has continued in 2023, which bodes poorly for this years harvest. Last month was Spains second-driest March this century, and this month is set to be the countrys driest April ever.
If it does not rain very soon, we are going to have a poor crop again, Kyle Holland, a vegetable oils analyst at commodity tracker Mintec, told the Financial Times. Spanish exporters expect a 10% drop in global olive oil supplies this year, compared to production in 2021, according to Reuters.
The increasing price of olive oil has had a knock-on effect on other goods that use it in their recipes. The price of a homemade pizza is up 22.5% year-on-year, driven by increases in the price of olive oil and other pizza ingredients, according to Bloomberg and its Pizza Margherita Index.
Its not just pizza: The cost of making paella, according to Bloombergs calculations, is up 18.5% year-on-year, thanks to higher prices for olive oil, vegetables, and rice.
Spanish prime minister Pedro Sánchez reduced the value-added tax on olive oil from 10% to 5% last year, as part of a wider set of tax cuts on basic food items.
A (cooking) oil shortage
Cooking oil prices surged in the wake of Russias invasion of Ukraine last February. Ukraine is one of the worlds biggest producers of sunflower oil, and the supply disruption helped send prices of sunflower oil and its alternatives surging throughout the world.
The shortage had global repercussions. U.K. supermarkets briefly rationed purchases, while street food vendors in India and Nigeria ditched fried snacks.
Surging (cooking) oil prices also pushed governments to consider protectionist policies. Indonesia limited palm oil exports for brief periods throughout 2022 and 2023 to help secure domestic supply, fearing public discontent as prices surge.
Fortunately, overall cooking oil prices are trending down, with the Food and Agriculture Organization reporting that their price indices for oilseeds, oilmeal and vegetable oils all fell in March, with oilseed prices falling to their lowest level since early 2021.
Food commodity prices are falling too, yet high fuel, labor and transport costs, as well as profit margins, are keeping prices at the grocery store elevated. And leaders dont have high hopes that prices will start coming down anytime soon.
Ill be honest, food prices will be difficult until the end of the summer, said French president Emmanuel Macron in an interview with Le Parisien on Sunday.
