Food price hikes criticised

20.11.2020 - 14:06
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Prices have risen at Icelandic supermarkets, even though sales are up and interest rates are down.

The Confederation of Icelandic Labour is harshly critical of new data showing domestic food and drink is now five percent more expensive at Icelandic supermarkets than it was before the pandemic reached the country, and imported goods are 11 percent more costly. The overall food inflation figure is 7.4 percent in one year.

While the króna has weakened this year, thereby driving up import costs, the Confederation points to historically low interest rates, stable inflation, and a 21 percent increase in supermarket sales as evidence the retailers are cashing in on the crisis. 

“When we’ve seen very quickly increasing prices, a product might have gone up by about three percent. We count that as being a lot. But this is more than half more, so it’s really an enormous amount,” Auður Alfa Ólafsdóttir, price monitoring project manager at the Confederation of Icelandic Labour, says. “Everything has gone up a lot, but by varying degrees.”

Lettuce is one of the things that has increased a lot: by around 35 percent. Oranges have gone up by around 26 percent. Pasta has also increased a lot, or by 16 percent. And butter by 12 percent.

“We’re seeing by far the biggest increases on fruit and vegetables, but then categories like bread and wheat products, milk products and cheeses have also gone up by a lot. And we’re really seeing large increases in all categories, even though some have increased a bit less,” Auður says, adding: “The financial environment [likely meaning inflation and interest rates] is of course very stable, which should have a positive effect on the operation of companies. And then we should also remember that demand for food has increased significantly at supermarkets. We are seeing food retailers’ takings increase by 21 percent in one year.” 

The increased demand at supermarkets has come despite the lack of foreign tourists in the country and is because more people have been eating at home more often this year while restrictions are in place on the operation of restaurants. “I would at least say that the operational environment does not warrant these price increases,” Auður believes.

Will prices continue to rise quickly? “I don’t expect food prices to increase more and hope they don’t. I don’t think there’s justification for it. Quite the opposite, in fact.” 

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