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Food inflation sets record in October

October's steep increase in food prices is unlikely to be outpaced in November or December, according to the Natural Resources Institute.

Inflation is expected to continue in the coming months, but at a slower relative pace. Image: Ismo Pekkarinen / AOP
Yle News

Food prices rose last month at the fastest clip since Finland joined the EU in 1995.

According to Statistics Finland, food prices rose by 15.7 percent year-on-year in October. In September, food was 14.5 percent more expensive, after rising by 12.5 percent in August.

Prices for flour, eggs, coffee and butter have gone up the most. The cost of flour climbed by 46 percent, with other items up more than 30 percent.

In October, only one food item was cheaper than a year ago: pears. Their price was more than six percent lower than a year ago in October.

October will go down in history

October's steep increase in food prices is unlikely to be outpaced in November or December, according to Jyrki Niemi, a research professor at the Natural Resources Institute Finland (Luke).

"October will end up showing the biggest annual increase," he predicted. "Last year, the price of food started to rise more clearly in November. So the base figures for the comparison months at the end of the year are higher. Therefore even sharper price increases than we've seen so far would be needed in order to exceed October's rate during the rest of this year."

That may be cold comfort for shoppers, though.

"Prices will continue to rise for the rest of the year and at least in the first half of next year. After that, they will start to level off," Niemi told Yle on Monday.

In late September, the Pellervo Economic Research Institute (PTT) forecast that overall food costs would rise by 11 percent this year. Luke is sticking by its own assessment, which is not quite as gloomy.

"The increase won't exceed 10 percent this year, even though we are seeing big rises now. Prices were still clearly lower at the beginning of the year," said Niemi.

PTT: Moderate rise in 2023

The PTT forecast said in September that food inflation would peak this autumn and at the end of the year with monthly inflation figures of "up to 15–20 percent". 

The think-tank predicted that food prices "will rise by an average of three percent next year. At the beginning of the year, we still see high percentages of increase. At the end of 2023, the price of food is estimated to decrease slightly, but the price level will still remain significantly higher than usual."

Sticker shock at the grocery store is mainly due to more expensive fertilisers and energy, which affect the entire food chain in agriculture, the food industry and the retail trade.

The rise is partly due to the production shortfalls caused by the pandemic and partly because of the Russian attack on Ukraine in February. The war has limited the availability of energy and fertilisers, especially in Europe, and shaken up the world grain market, which was already suffering from last year's poor harvest. That in turn has raised feed costs for meat and milk production.

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