Food prices are rising: what is happening and what to expect next
Kyiv • UNN
Due to the drought and falling purchasing power, the "borscht set" has risen in price by 2.5 times. The expert predicts a slowdown in the growth of prices for cheap products by mid-December and a rise in the price of the premium segment.
Prices for bread, vegetables, meat and other basic foodstuffs continue to rise. Oleg Pendzin, executive director of the economic Discussion Club, told us what to expect in the coming months in an exclusive interview with UNN.
The cost of the" borscht set " has increased 2.5 times, and prices for such familiar products as bread will increase by 10% this year.
First of all, a decrease in total production plays an important role. Abnormal heat and severe drought this year led to a shortage of crops: grain was harvested by 10 million tons less, and the potato harvest decreased by 30%. This automatically affected the supply in the market, pushing prices up.
"The main factor is a severe drought and a physical decrease in total production. That is, this is the first main thing for which we are talking about price increases," Oleg Pendzin said.
Another factor of price growth, the Economist called the decline in the purchasing power of the population.
According to a study by the Razumkov Center, 44% of Ukrainians are forced to save on food, refusing expensive products and looking for cheaper substitutes. The middle class, which has traditionally provided demand for better and more expensive products, reduces costs and switches to cheaper goods.
The middle class, which has always shown demand for more expensive products, is now eroding and slowly sliding into the cheaper segment. But in that cheap segment, there were already quite a large number of people, whom we call low-income. Therefore, we have an increased demand for cheap products within the consumer basket. At the same time, the demand for expensive products has sharply decreased
So, for example, there was an increase in demand for products of the "borscht set" — potatoes, beets, carrots and cabbage. Their cost in some places increased by 2.5 times. Also, bread prices increased by 14% last year, and producers of this product are talking about an increase in prices by about 10% by the end of 2024.
At the same time, prices for expensive products, such as meat and fish, are growing much more slowly. For example, over the past year, meat prices have risen by only 2%, and fish — by 4%. Manufacturers are forced to limit price increases due to the low purchasing power of consumers.
It is also expected that by December 15-18, the growth of prices for cheap products will slow down. And they will start to grow on more expensive products, because people will prepare for the New Year holidays and the demand for meat, smoked products, and everything that is put on the festive table will increase.
The increase in food prices, according to the expert, is not related to the power outage.
The purchasing power limit is now falling. Undoubtedly, the manufacturer would like to sell more expensive, but he can't sell, but people don't have the money. Therefore, in this situation, I think that someone will not have such an extremely large powerful increase in prices due to power outages
Therefore, now the main restriction for further price increases remains the purchasing power of the population, which is decreasing in the context of the economic crisis. This creates a situation where even in the event of an increase in production costs, manufacturers cannot significantly raise prices, since not all consumers will be able to afford it.
