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Even olive oil prices will increase by 25%

2022-08-09 12:17:11Biznes SHKRUAR NGA REDAKSIA VOX

Even olive oil prices will increase by 25%

The price of olive oil will rise as heat waves hit production in Spain hard, Europe's leading exporters have warned. This will affect prices in stores in the next three to four months when companies renew their contracts.

According to them, customers could see price increases of 20-25%. 

Spain produces almost half of the world's olive oil. But the country, along with other olive oil-producing parts of Western Europe, including Italy and Portugal, has experienced extreme temperatures and a lack of rain in recent weeks.

Last year, Spain produced about 1.4 million tons of olive oil, but officials were now forecasting up to one million tons this season. Dry weather can also affect the next season's harvest if olive trees cannot grow new branches due to lack of water. This has an impact on global prices.

In July, the Mintec benchmark price for extra virgin olive oil rose to its highest level so far this year, up 7.3% from last month and 14.2% from a year earlier, according to the research group of the market.

This would eventually feed into prices for customers, although there would be a three to four month delay because many companies would have already signed 12-month contracts with retailers. However, companies will eventually have to raise their prices when they renew contracts, and customers could see increases of 20-25%.

The average price of private label olive oil in the UK's four biggest supermarket chains rose 50.2% compared to last year in early August, according to retail research firm Assosia. From June to July, average prices rose by 28.5% and if the dry weather continues, prices could rise further.

However, if the grain corridor agreed by Ukraine led to more sunflower oil supplies leaving the country, that "might bring some relief." The disruption of sunflower oil supplies from Ukraine was also contributing to "dramatic" price increases as people turned to olive oil as an alternative, boosting demand. Ukraine used to be the world's leading exporter of sunflower oil.

Other parts of Western Europe that produce olive oil have also experienced record high temperatures and this would reduce production in other countries as well. In July, Italy declared a state of emergency in five northern regions surrounding the Po River after experiencing its worst drought in 70 years.


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