Irish food price inflation is not “showing signs of abating” in the near future, analysts from Bank of Ireland have said, due to global factors including weather and supply chain disruption.
In its latest outlook report for the food and beverage sector, the bank said the sector saw “robust” export growth in the first half of the year, totalling €9.4 billion, an increase of 15 per cent from the January to June period last year.
Still, the industry is facing steep challenges, including a “high cost base” and rising food and ingredient prices.
Food price inflation in Ireland rose to a 20-month high of 5 per cent in August, according to the Central Statistics Office’s latest flash estimate for the harmonised index of consumer prices.
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Earlier this week, consumer data company Worldpanel by Numerator said that grocery prices rose by 6 per cent over the summer months, with the rate of increase now more than three times higher than the general rate of consumer price inflation within the economy.
In Wednesday’s report, Lucy Ryan, head of food and beverage at Bank of Ireland, said that food price inflation is unlikely to abate in the near future.
“Food Inflation and climate change are of concern, and whilst the food supply chain is carefully controlling the high cost-base, consumer food and beverage prices will remain high,” she said.
Despite a decline in cereals, dairy and sugar prices, a global index of food prices rose by 1.6 per cent between June and July, largely due to higher meat and oil prices, according to the report.
Cocoa prices have moderated somewhat in recent months, but “with low global stock levels, it is likely cocoa prices will stay high”.
Global coffee prices, meanwhile, “have risen significantly”, Bank of Ireland said.
“Anticipated prices show high prices are likely to continue,” Ms Ryan noted. “This is driven by yields affected by extreme weather, disrupted supply chains, tariffs affecting supply routes, and political instability.”
On a more positive note for Irish food exporters, Ms Ryan said the imposition of a 15 per cent tariff on EU goods imported into the US has “brought some level of certainty” for the sector after months of speculation about US trade policy.
