Grocery prices expected to increase fast in coming months

Food products.
Food products. Source: Merilin Pärli/ERR

The prices of foodstuffs in grocery stores have increased considerably over the past few months, but traders have already noted an increase since the summer of 2021 and expect grocery prices to increase at an accelerated rate over the coming months.

The high prices of fuel, energy and cereals has put farmers and food producers in a complicated situation, because they need to increase the price of produce. For consumers, this means that the final product prices are set to increase, which could have already been spotted last December.

Supermarket chain Selver business accounting manager Kristjan Anderson said producer price increases can be kept to a minimum for consumers, but not for too long. The price changes already known to the supermarket are set to take place in March and April.

"I am somewhat pessimistic about signals that say inflation, which reached 6 percent in grocery stores in December, the total price index indicator for December was 12 percent, could turn in the spring and fall in summer. I am not that optimistic," Anderson said.

He pointed to milk and said its price has been unreasonably low, considering how much of it is purchased. "The percentage is high - 30, but if you end up paying €0.69 instead of €0.50 for a bag of milk, is that so much higher? The answer is 'no'," Anderson said.

He said that there are not too many products that are cheaper now compared to last year. "Still, there are some fruits and import products, which do not reflect a price increase, such as bananas," Anderson said.

Grossi grocery store chaing owner OG Elektra is also a pig farmer and can keep the price of pork down in their stores, but increased cereals prices will not allow that to happen for too long.

"Feed, that is very-very expensive, at an all-time level. And I think it is easier for pig farmers and cereals farmers to just sell their pigs and take their cereals to the market than feeding the animals the grain and selling the meat at a loss," Grossi Toidukaupade CEO Raigo Mõlder said.

Local produce prices are formed by the location and what solutions the producer uses. For example, goods grown on a gas-based heating solution are more expensive, supplemented by transport costs.

Diary producer Valio covered part of the price increase from profits and can no longer delay price increases. "If we start from raw milk, the price of raw milk was €0.31 a year ago, it is €0.40 today. This means a 29 percent increase. Additionally, package prices have also gone up considerably," Valio CEO Maido Solovjov said.

Solovjov said 2022 will show how consumers accept price increases. "It can certainly affect demand and can also affect what prices will be purchased this year," he said, adding that import produce from Germany and Poland could enter the Estonian market, if price remain high for an extended period of time.


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Editor: Kristjan Kallaste

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