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Food prices back on the rise after four years of markdowns

Food prices are going up again on world markets, and the increase is starting to be reflected in Finland's supermarkets.

Kuva kaupan hedelmäosastolta. Etualalla on cantaloupe-meloneja
Image: Elisa Kinnunen / Yle

Prices for food stuffs are on the rise again in Finland after four years of falling rates and cut-throat price slashing campaigns among Finland's top three competing grocery chains.

Finland's Natural Resources Institute Luke has charted growing food prices and determined that consumer food expenses in May 2018 went up by 2.4 percent when compared to the year before.

The food groups that have seen the largest increase in price include fruits and vegetables, berries, butter and meat products. The change can be explained in part by a rise in cereal prices and a drop in fresh produce due to drought.

Luke researcher Jyrki Niemi says the switch has been surprisingly swift.

"Consumer purchasing power has also improved, so sales have picked up. Price tags aren't such an important factor in the buying decision," he says.

S Group says price wars will continue

Ilkka Alarotu, retail business manager of Finland's retail chain S Group, says that his cooperative will keep up its fierce competition when it comes to prices.

"Cost reductions are in no danger of ending, but the price increases are tied to global market forces that S Group has not control over," he says.

Kesko, the other big player in Finland's grocery duopoly, would not comment on the Luke findings. The owner of Finland's K grocery stores will release its six-month financial report for the first half of 2018 next Wednesday.

Riikka Nordqvist, purchasing manager for Lidl, the third-place chain in Finland's grocery store pecking order, says that future price developments are hard to predict, as many crops have yet to be harvested.

"The price of basket of food has fallen steadily for several years, but now it looks as if there are factors at play on the raw ingredient side that will force us to take a look at sales prices more closely," she says.

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