Wednesday

3rd Jun 2020

Europe's food prices up twice the inflation rate

Food prices in the European Union climbed at almost twice the rate of inflation over the past year, according to official EU figures released Monday (2 June).

Eurostat, the EU's statistical body, said that food prices had risen on average by 7.1 percent, across the 27-nation bloc from April to April while the overall inflation rate was 3.6 percent.

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Member states in eastern Europe, among the poorest in the bloc, have been the hardest hit by the price rises.

Bulgaria saw a 25.4 percent increase in prices, while Latvia, Estonia and Lithuania all saw hikes of 18-22 percent.

Meanwhile Portugal saw the lowest annual food inflation at 3.2 percent, followed by the Netherlands (5.4%) and France (5.5%).

The figures, published on the eve of a United Nations food summit in Rome, surveyed nine food categories and showed that dairy products in the EU were 14.9 percent more expensive, while cooking oils and fats prices rose by 13.2 percent.

By contrast, the previous year's statistics recorded a 1.5 percent rise in the annual price of milk, cheese and eggs in Europe, while oils and fats saw an average price reduction of three percent.

Not all categories registered such a price hike last year. Fish and seafood clocked in a price rise of 3.3 percent while vegetable prices actually fell by 1.2 percent.

Food summit in Rome

Food prices have topped the political agenda around the world since earlier this year when rioting broke out in developing nations as people could no longer afford to put a bare minimum of food for their tables.

Experts suggest the phenomenon has been the combined result of poor harvests, rocketing fuel prices and a rise in demand from large emerging economies such as India and China.

The UN's Food and Agricultural Organisation (FAO) in Rome, which is host to the food summit starting Tuesday, last week said that 22 countries, mainly in Africa, are especially vulnerable to the rising food prices.

Director-general Jacques Diouf of FAO last month said the long-scheduled meeting had turned the summit into an emergency meeting while the head of the World Bank, Robert Zoellick, said the crisis has put back poverty reduction efforts by seven years.

Biofuels

Within the European Union itself, a further debate has been raging about the possible impact of its biofuel targets on food prices.

In Spring last year, EU leaders agreed that by 2020, the bloc should aim to have biofuels account for 10 percent of transport energy as part of a larger legislative package aimed at combating global warming.

Since then, biofuels have moved from being viewed as a positive contributor in the fight against climate change to something close to a pariah, with international experts, including from the UN, suggesting they may be contributing to the food crisis as increased demand for fuel pushes up prices.

An FAO report released last week concluded that the "benefits of biofuels production based on agricultural commodity feed stocks are at best modest, and sometimes even negative" while the International Monetary Fund has suggested that increasing demand for biofuels explains "20 to 30 per cent" of recent food price increases.

The EU, as a whole, has so far stuck to the target, although there have been dissenting voices from individual member states such as the UK.

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