Food prices in Latvia should stabilise on the current level unless some unexpected shocks occur, admits the Head of the Agricultural Market Promotion Division of the Institute of Agricultural Resources and Economics (AREI) Ingūna Gulbe.
She said food prices went up very, very rapidly during Covid-19 pandemic and at the start of the war in Ukraine.
“This is because the world order had changed, both in people’s lives and for businesses. We had to to reorganise logistics – where do we source sugar, where do we source packaging – everything has changed. We managed all this. This is why food prices started going down at the beginning of the year. People still say nothing has changed, that it’s always been this week. We notice the good slowly, but we see the bad all the time and focus on it,” said Gulbe.
She said the prices of dairy products have gone down significantly – almost by half for milk and butter when compared to the previous period. The price of sunflower oil has also decreased twice. Sugar, flour, eggs and poultry meat have also become cheaper during the year. Coffee, tea, bananas and olive oil have become more expensive.
At the same time, Gulbe also said the situation continues changing very rapidly together with various natural disasters, such as floods.
“As soon as “natural wonders” occur in some region, they leave an impact on food prices. It’s not possible to predict what may happen in the future, as the situation around the world changes very rapidly. We don’t know how the Israel-Iran, Israel-Palestine situation could be resolved, what kind and how quick aid will be for Ukraine – there are many factors to consider,” she said, adding that if the situation remains as it is now, without any major shocks, food prices should stabilise at their current level.
He also mentioned that prices may go up for some group, because it is already known that cocoa and chocolate will definitely not be cheaper, because the price of raw materials is up three times. However, it doesn’t mean all sweets will cost three times more, because they are not made from 100% chocolate.
“I hope prices will remain as they are now, with a slight tendency to grow, because resource availability is not getting any better, and the green course does slow everything down a bit. The world population keeps going up, but the size of territories used for agriculture does not. The introduction of new modern technologies and automation helps to produce food cheaper and in larger volumes. New scientific advances in the cultivation of food in urban and laboratory areas also contribute. These trends are what prevent food prices from skyrocketing,” Gulbe explained.
She also said that food prices in Latvia are affected the most by labour force and purchasing power.
“I am both worried and would like food prices not to fall, because one of the reasons why they could fall is through the economic recession and stagnation. We are already hearing talk that the government may have to cut the budget, which means lower wages. I hope this doesn’t happen, and I hope food prices will no go down because of economic decline. I hope this won’t happen and prices will remain on approximately the same level they are now,” said Gulbe.
She mentioned that there are almost no products in Latvia that are 100% made from local raw materials. “We can grow something, but the packaging comes from elsewhere. Some ingredient comes from some other country as well. A lot is sent around the continent instead of the Red Sea. This means the goods become more expensive. Everyone feels the change. The situation around the world is very fragile, unstable and unknown. If everything remains as it is now, prices should remain on their current level, without any rapid leaps in one or other direction,” said Gulbe.
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