The prices of bread, meat, dairy products, oil and eggs may increase in the coming months. The reason is the strong increase in fertilizer prices observed in the world, economists from Credit Agricole Bank Polska reported.
The Macroeconomic Analysis Department of Credit Agricole Bank Polska indicated in a new report that in recent months we have been dealing with a strong increase in the prices of mineral fertilizers, which is global in nature. As reported, the world fertilizer price index published by the World Bank increased in the period January-September this year. by 56.1 percent. The beginning of October also saw a strong acceleration in price growth.
According to economists, the main reason behind the rising prices of fertilizers is the strong increase in the price of natural gas, which accounts for 60 to 80 percent of the cost of producing nitrogen fertilizers. Moreover, the prices of potassium fertilizers are influenced by the sanctions imposed by the European Union and the USA on Belarus, which is one of the largest producers of such fertilizers. In addition, China, which is the world’s key producer of phosphate and nitrogen fertilizers, restricts their exports in order to stabilize prices on the domestic market.
Food prices 2021
Accordingly, economists predict that farmers around the world will reduce the use of fertilizers, which in turn will be negative for the efficiency of plant production.
“As a result, it is difficult to expect that the next season will bring a recovery of the currently low, compared to historical background, world stocks of cereals and oilseeds. Taking into account the continued growing consumption of cereals and oilseeds in recent years, this will have an impact on the increase in their prices” – we read. Thus, feed prices will also increase, which in turn means a further increase in cost pressure on livestock production.
Therefore – as reported by Credit Agricole economists – “the currently observed increase in fertilizer prices will in the coming months contribute to an increase in the prices of all basic food products: bread, meat, dairy products, oil and fats and eggs”.
Inflation in Poland – forecasts
According to economists’ forecasts, the cumulative impact of the increase in fertilizer prices on the annual growth of food prices in the fourth quarter of this year will amount to approx. 0.6 percentage points. percent “In the first half of 2022, fertilizer prices will boost the dynamics of food prices by another 0.6 percentage points. Assuming a correction of world fertilizer prices in the coming months, in the second half of 2022, the impact of higher fertilizer prices on the path of food prices will start to fade” – we read.
Credit Agricole’s forecasts assume an increase in the annual price dynamics in 2022 compared to 2021 in all major food categories. The exception are beverages, where – as indicated – next year we will have a high base effect in connection with the so-called sugar tax, introduced from the beginning of 2021. “This is consistent with the assessment that the fertilization shock will have an impact on both the prices of plant and animal production and, consequently, will be reflected in all major food categories,” he added.
According to economists, the dynamics of food and non-alcoholic beverages prices will increase to 4.4% in 2022. year on year compared to 2.8 percent. in 2021. CPI inflation (consumer price index) in Poland is expected to increase in 2022 on an annual basis to 4.9%. against 4.8 percent in 2021.
Main photo source: Shutterstock