Although food prices in Finland were significantly higher during April compared to the same period last year, month-by-month data provided by Statistics Finland on Monday showed a dip in average prices for only the second time since Russia's invasion of Ukraine.
According to StatFin's calculations, the price of sugar increased by almost 43 percent year-on-year in April, while flour was up by over 32 percent and pizza by 29.5 percent compared to last year.
Overall, food prices increased by 13.7 percent last month compared to 12 months prior. Only coffee, down by more than nine percent, and some vegetables were cheaper last month than they were in April of last year.
Statistics Finland also reported that the overall inflation rate during April was 7.8 percent, meaning food prices rose at a much higher rate than other products.
Signs of a turnaround
Despite this, the number-crunching agency's report noted that when compared month-by-month, instead of year-on-year, food prices in Finland fell by 1.22 percent in April from March.
While that may seem like a small and insignificant dip, it represents only the second such price decline since Russia's invasion of Ukraine and the largest decrease since 2019.
Looking at individual product groups, the prices of some vegetables were down by more than 27 percent, although these changes can also be explained by natural seasonal variations.
Meanwhile bananas were almost seven percent cheaper in April compared to March, while coffee prices, which also fell sharply on an annual basis, were down by five percent.
"Signs of a turnaround seem to be in the air and the situation is improving for the consumer. At the end of the year, food prices will be several percent lower than they are now," Research Professor Jyrki Niemi of the Natural Resources Institute Finland told Yle.
"I would almost dare say five percent lower," he added.
However, Niemi noted that prices have been rising so much and for such an extended period of time that even with this projected drop, prices at the end of 2023 will still be significantly higher than at the beginning of 2022.
"Last year prices rose by more than 10.5 percent and we estimate that this year people will still have to pay between 7 and 8 percent more for their food," he said.
Despite this, Sari Forsman-Hugg, Research Director of Pellervo Economic Research (PTT), told Yle that consumers in Finland may have survived the worst of escalating inflation.
"We have forecast that food price inflation will slow towards the end of the year. It is even possible that prices could fall slightly. But we do not expect a sharp drop," she said.
Uncertainty clouds economic horizon
Although the prices of fuel, fertiliser and animal feed have fallen from their peak, Forsman-Hugg noted that the cost of food production is still significantly higher than before Russia's invasion of Ukraine.
In addition, she said, wage costs are also rising, putting the same strain on food production and trade as on other business activities.
These factors, coupled with a number of significant uncertainties, make predicting the future economic outlook very challenging.
"What are the weather conditions like this growing season, will we have a good harvest? What will happen in the war, and how will grain be transported from Black Sea ports? All of this could swing market prices," Forsman-Hugg said.
There is also the question of whether retailers and the food industry will reduce product prices in line with the decline in production costs, or if they will instead seek to improve their own profitability.
"The price of food is a key competitive factor for retailers, and we will certainly see a lot of different price campaigns," she said.
Jyrki Niemi of Natural Resources Institute Finland believes consumer behaviour will have a role to play in keeping price competition among retailers going.
"In an economy where consumer purchasing power is on the rise, retailers could have the opportunity to keep margins high. But when the economy is slowing and purchasing power is not growing, price plays a big role in choices," Niemi said.
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