Before the end of July, sunflower oil is likely to disappear from Irish supermarket shelves with the inevitable demand for an alternative sending the price of other cooking oils through the roof.
The reason? The Russian invasion of Ukraine. Between them, the two countries produce more than 90 per cent of the world’s sunflower oil and, with Ukrainian production grinding to a halt as the brutal war grinds on and Russian producers’ access to European markets blocked by sanctions, the world is simply running out of the product.
In the UK there have been recent reports of sunflower oil stock-piling. Panic buying might be understandable but makes little sense. Consumers might think they can protect themselves against what is – in truth – one of the mildest consequences of the war, by buying a few extra litres of cooking oil but they are wrong.
The harsh reality is there is little anyone can do to shield themselves from the economic toll it is having.
Just ask Irish shoppers. That is what we did.
Price increases
Earlier this week, The Irish Times asked people if there had been any price increases which had jumped out at them as they walked up and down the aisles of their chosen supermarkets. The responses came fast and were as homogenous as the milk in your fridge, with the rollcall of price hikes proving to be as long as it was depressing.
“Tin of tomatoes in Tesco – new brand, €1, not on offer. Tried them, liked them, went to buy them the next week – €1.39,” said one shopper.
“Own-brand butter gone from €2.19 to €2.89 in Supervalu,” said another, while a third was less than pleased to note that a six-pack of bottled water had climbed from €1.75 to €2 in her local Dunnes Stores.
Someone else noted that prices of the products she bought had started jumping in increments of 50 cent. She said punnets of blueberries and blackberries which were on a two-for-€5 deal were now on a two-for-€5.50 deal. “A 12-pack of Weetabix has gone from €3.19 to €3.70. Ariel gel has gone from €5 to €5.50. Nothing going up by 20 cent any more,” she said.
Bread, milk, meat, fish, cereal, cooking oils and cat food were among the products identified as having climbed in price since the start of the year.
The bad news is that things are likely to get worse before they get better, if, that is, they do get any better. The omens are certainly not good as since the start of the year things have only got worse.
In February, the climbing price of food and fuel was having an impact with many Irish households bracing themselves to be worse off by about €2,000 over the course of 2022. Then Russia invaded Ukraine and everything got suddenly darker.
The cost of energy soared as did commodity prices with the net result that consumers are paying more than even the most gloomy prognosis might have suggested as the spring dawned.
Inflation surge
According to Central Statistics Office data, published earlier this month, inflation has surged to a 22-year high of 6.7 per cent, up from 5.6 per cent a month earlier, with a warning from the Central Bank that inflation could rise above 8 per cent this summer.
Electricity, gas and other fuels were up almost 47 per cent year on year while petrol and diesel prices climbed by 35 per cent and 46 per cent respectively. By that measure, an increase of just 3 per cent in food and non-alcoholic beverages seems modest.
But we are only getting started. Meat, bread and cereals, mineral waters, soft drinks, fruit and vegetable juices, and milk, cheese and eggs have all climbed in price in recent weeks with food inflation set to worsen.
“Nothing has been unaffected by the inflation because all input costs have gone up notably – energy and transport costs,’ says retail expert and TU Dublin academic Damian O’Reilly.
“There has been a significant increase in the price of milk and that is going to have a knock-on effect on everything that uses milk,” he says. “And with 29 per cent of the world’s exported wheat coming from either Russia or Ukraine, that is going to have an enormous impact on things such as bread and pasta.”
Cutting bills
According to retailers, consumers have started looking at ways they can cut their bills at the tills. There has been a move towards more own-brand products with people also looking to buy cheaper cuts of meat – swapping out sirloin steak for striploin, for example, or simply buying less.
Retail analysts Kantar will release its monthly tracking data on Tuesday but ahead of that its spokeswoman, Emer Healy, paints a bleak picture of what is happening. Over a 12-week period to April 17th it is recording a price increase of 1.3 per cent, a figure which takes into account promotions.
But some categories are climbing much faster than the average: chilled fruits are up 3.5 per cent, flour is up 3 per cent, soft drinks are up 3.8 per cent and many other household goods have climbed by over 4 per cent in just three months.
Kantar is putting the latest inflation at 4.65 per cent, the highest level since September 2013.
As part of the research due out next week it also polled thousands of households and found that 23 per cent say they are struggling to make ends meet. “That is a huge number and would equate to 413,000 homes struggling and this is only four months in the year,” Healy says. “It is really stark.”
Another shift has been a reduction in the number of promotional products on shelves. In April 2020 about 30 per cent of all grocery was selling at a promotional price. Today it is only 24 per cent.
That points to a huge level of upheaval faced by retailers. According to industry sources, many of the bigger suppliers are refusing to agree to long-term contracts with retailers because they do not want to get locked into prices at a level which may seem too low three months from now. They are also concerned they might not be able to honour contracts as a result of shortages.
Wage costs
Staffing and wage costs is another looming concern. “If unions look for wage increases to match inflation and want 6 per cent, then that will see input costs rise and there will be a further spiral in food prices,” one source told The Irish Times.
Big retailers are also likely to reduce the number of products they stock by 5-15 per cent which could see about 2,000 products disappear from the largest outlets and there is likely to be more shrinkflation as the year progresses.
And back to the sunflower oil. Anyone who thinks they will be okay as they don’t buy that product is very much mistaken. A huge amount of everyday products have it as a core ingredient and if it can’t be found or if the price soars, so too will all those products. And that is only one ingredient and one input cost rising. There are many, many others.
The Irish Times wants to chart price shifts in the weeks ahead and has compiled and priced a list of 25 commonly bought products. We will check on these items next month to get a sense of how they are moving and what impact that will have on our pockets. If you notice any big price increases, let us know at pricewatch@irishtimes.com.