The Bank of Spain warns of the effects of the war in Ukraine as a factor of upward pressure on food prices
That the increase in the price of the shopping basket has become one of the main concerns of Spanish families is no secret. The impact of the war in Ukraine, which first affected energy prices and then food prices, has led to runaway inflation that reached 10.8% in Spain in July.
A fact in which food has been gaining weight in recent months, with special emphasis on basics for consumers. Oil, for example, has come to be paid for at the price of gold and, according to calculations by the Bank of Spain, it is already 56% more expensive than just a year and a half ago.
The agency published a report on Wednesday in which it analyzes the impact of the rise in the prices of raw materials on inflation and its transfer to the price of food. And according to the results obtained, in the euro zone as a whole, 93% of the foods that make up the harmonized price index (IPCA, which compares inflation between the different countries of the euro zone) registered in June «rates extremely high in historical terms.
This percentage barely reached 27% and 54% in the two previous episodes of strong rise in raw materials, in the periods 2001-2002 and 2007-2008.
If compared by country, the analysis of the Bank of Spain also reflects how the rise in prices of basic foods has been more intense in our country than in the average for the euro zone. Specifically, oil rose 37% in June in Spain, compared to 29% in the region.
Cereals, coffee, dairy products and eggs, and meat did so by around 16%, 11%, 16% and 10%, respectively, while the rise in the euro zone as a whole was 11% in cereals and coffee, while dairy products, eggs and meat rose by around 12%.
If January 2021 is taken as a reference, oil is now 34% more expensive in the euro zone, compared to the 56% rise experienced in Spain. Cereals and dairy products and eggs are 12% and 13% more expensive, respectively in the region, while in Spain, since the beginning of 2021, cereals have risen 17%, dairy products and eggs 16%, and 10%. % the meat.
The Bank of Spain assumes that if food raw materials rise by 10% temporarily «there is an increase in the general year-on-year inflation rate in the euro area of about three tenths after twelve months».
This rise, moreover, occurs gradually, "reflecting the fact that producers along the value chain and retailers initially absorb, and progressively pass on, the higher cost of raw materials to the final consumer."
The body commanded by Pablo Hernández de Cos recalls that the futures markets point to a certain downward trend in food prices in the coming years. However, he warns that the war in Ukraine "would continue to exert upward pressure on these prices."
They recall that both countries are important producers of food raw materials, such as cereals "and their production and export capacities are significantly limited." In addition, the conflict is affecting the prices of energy and fertilizers, which are two crucial supplies in the production process.
The Bank of Spain also warns of the impact of the adverse climate that has also forced some countries to ban or impose restrictions on exports of some food raw materials, "which means additional stress on global food supply chains, with the potential to generate very persistent additional increases in international prices.