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Economic forecast: Price of food will finally start to fall next year

A fresh report from Finland's Pellervo economic research institute PTT says the price of food will decline by about two percent in 2024.

Groceries on a belt at the tills.
Finns are buying more and more in-house brands, and it is believed that price competition will continue next year as well. Image: Jussi Koivunoro / Yle
Yle News

The upward trend in food prices seen over the last couple of years will reverse next year, according to new economic projections by the Pellervo economic research institute PTT.

The institute's latest autumn agricultural and food economy forecast, released on Tuesday, offers moderately good news for consumers – projecting a fall in the price of food by about two percent next year.

This year, prices are expected to rise by an annual rate of 8.5 percent. The upward trend has already slowed and will continue to slow down during the remainder of the year.

No return to the past

Food in Finland now costs about 20 percent more than just a couple of years ago, when prices began a rapid rise.

The PTT forecast does not indicate a return to previous price levels.

Although production costs are declining, the cost level of the entire food chain remains high.

World market prices of key products, such as grain, milk and meat, are falling, but the price of sugar, for example, is rising. This may show up in prices for processed products in the longer term.

Calculated in euros, food bills for consumers in Finland have increased, but the relative share of total consumption expenditure has remained unchanged.

Lower volumes of food are being bought by households than before, and consumers have switched to cheaper products, such as in-house brands.

PTT estimates that supermarket price campaigns will continue to increase as the retail trade competes for consumers whose purchasing power has been eaten away by inflation.

Meat consumption in Finland is slowly decreasing and the demand for plant-based products is still growing. Higher prices have especially affected the consumption of beef.

In the case of pork sales, the decline is expected to slow and poultry consumption to continue growing.

Beef production is projected to decrease by one percent this year. Poultry production is also down this year, but capacity is expected to expand in 2024 and output will be increased to meet both higher domestic and export demand.

Total milk production will decrease this year in Finland more sharply than next year. A particularly large decrease is in organic milk, the demand for which, like other organic products, has clearly fallen.

Farmers' incomes down

Producer prices are down from last year's level, which was historically high. Income in the sector has fallen this year and will continue downward next year.

The price of fodder, fuel and energy is falling and it is estimated that they will also decline next year, helping out livestock farms in particular.

On the other hand, salary costs are increasing and interest rates are rising.

This year's grain harvest in Finland will be a fifth smaller than usual, also affecting the income of agricultural entrepreneurs. The harvest of around 2.9 billion kilos is enough to cover domestic consumption, but its quality is still a question mark.

The Pellervo economic research forecast is based on the assumption that there will be no major changes in Russia's war against Ukraine this year or next. Otherwise, it says, the picture could quickly change.

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