At the beginning of the year, food prices are mainly increasing. What further price development can we expect
The start of the new year brought another increase in prices, especially flour, which has risen by 11.42 percent compared to December. This is also reflected in the prices of bread, experts say. What else we should prepare for this year.
According to data from the Czech Statistical Office, flour prices rose in January to an average of 18.44 crowns. For example, with plain flour, the price increased by almost 11.5 percent compared to the end of last year. As a result, the price of a kilogram of cumin bread increased by 0.16 percent to 38.39 crowns, and the price of a kilogram of white bakery products increased by 0.04 percent to 67.94 crowns.
What is the reason for the price increase? Last year's harvest was not too good, as the Association of Industrial Mills pointed out some time ago. But this is not the only cause. According to experts, it is also reportedly due to the gradual shrinking of the cereal sowing area not only in our country, but also elsewhere in Europe, and at the same time, an increasing demand for wheat.
Other items that saw significant price increases in January include white yogurt (up 4.6 percent) and pork roast (up 3.2 percent).
"The development of prices in the food industry supports the expectation that the annual increase in food prices for end consumers will continue in the coming months,"
noted in this regard for LP-Life analyst Generali Investments CEE Radomír Jáč.
However, it should also be noted that some types of food have become cheaper at the start of the year. This applies to Edam brick cheese (by 4.5 percent) or potatoes (by 4 percent). At the same time, the price increase of some other products, which were often the target of criticism, stopped. According to data from the Czech Statistical Office, these include butter and eggs. However, when we look at the development of their prices with some distance, we find that the price tags in stores for both of these items are almost two fifths higher than a year ago.
Uncertain energies
Due to short-term fluctuations in energy prices, there is also a threat of cost increases in the industry. During December, the pace of price growth accelerated to 2.8 percent.
"The growth in energy prices reported by the Statistical Office was, in our view, due to a significant but temporary increase in the spot price of electricity in the wholesale market, which was recorded before Christmas. Prices of electricity dropped by the end of December and stayed significantly below the aforementioned December high during the first two weeks of January,"
told the server Ceskenoviny.cz the chief economist of Commercial Bank Jan Vejmělek.
Economist Lukáš Kovanda also describes the situation with electricity.
"Czech households now have electricity that is tens of percent more expensive than households in both main export markets of the Czech Republic, specifically 20 percent more expensive than German households and 90 percent more expensive than Slovak households,"
written by LP-Life Kovanda.
Another item that makes us reach deeper into our pocket is transportation. This is due not only to the fact that the prices of basic tickets of Czech Railways have already risen, but also the In Karta application.
Those who plan an investment in the form of buying an apartment or a family house or a new lease should also pay attention. Low supply and increasing demand especially in Prague or Brno can drive prices up further.
Inflation should fall below three percent
So what will this year overall be like in terms of price from the perspective? According to analysts at Komerční banka, it should slightly slow down and fall below the central bank's two percent target.
Gradually, prices in services could stabilize, especially in the field of gastronomy and accommodation, which have jumped by 43 percent over the last three years according to data from the Czech Statistical Office. The same could hopefully also apply to postal and telecommunication services or services related to energy for housing.
With the stabilization of consumer prices, there will also be an increasing willingness of households to spend. However, the recovery of households' purchasing power should only be gradual, by about 3.8 percent.
However, the steps of the new US President Donald Trump are unknown in any case. On the one hand, there is speculation about cheaper CNG and oil, on the other hand, there is a threat of imposing a flat duty, which unfortunately could also affect us.
Despite the anticipated increase in food prices and some services, the rise in prices could ultimately slow down. Therefore, trade people also expect higher sales hand in hand with how we should spend more.
Sources: author's article, own questioning, Czech Statistical Office, Ceskenoviny.cz
