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Saturday, July 13, 2024

Food price hikes outpace inflation

Norway is known for high food prices, but now they’ve risen to shocking levels despite (or because of) large government subsidies to Norwegian farmers and tariff protection from foreign competition. New figures this week show that they rose at twice the rate of inflation last year, which also checked in at more than twice the level sought by Norway’s central bank.

These little boxes of small Norwegian potatoes cost NOK 24.90 (around USD 2.50) at one of Norway’s largest grocery chains, Meny, late last summer. Now their price has jumped by 40 percent, one of the more dramatic examples of recent food price hikes. The sign accompanying the price tag describes them as “food treasures,” and they are very popular, but producers often don’t always benefit from the prices that their retailers impose. PHOTO: NewsinEnglish.no

State statistics bureau SSB (Statistics Norway) reported this week that the Consumer Price Index rose by 4.8 percent from December 2022 to December 2023. Food prices, however, rose 10 percent on average. Seafood prices were up by 18.6 percent, pork was up 17 percent, beef prices rose 11.8 percent and both fresh fruit and vegetables cost just over 13 percent more than the year before.

A less onerous increase of 7.6 percent for dairy products and eggs helped offset the rise, but there’s no question that a trip to a Norwegian grocery store has become even more expensive. SSB economist Espen Kristiansen noted that prices haven’t risen by so much since the 1980s. Norges Bank still has an inflation target of just 2 percent.

Kristiansen and his colleagues link the highest price hikes in 40 years to Norway’s weak currency, the krone, which boosted the price of all imports like sugar (up the highest, by 24.1 percent), along with higher energy, transport and personnel costs.

“It has to do with major price increases in all parts of the value chain for food, including electricity, fuel and raw commodities,” Bendik Solum Whist of the business organization Virke told financial news service E24. He called the past year’s price hike “abnormally high.”

Prices on many items have continued to rise in January. A Frøya salmon loin that cost NOK 79 at the discount grocery chain KIWI early last autumn, was priced at NOK 117 on Thursday. A box of small potatoes that cost NOK 24.90 late last summer at the larger Meny grocery chain (owned by the same parent company, NorgesGruppen, as KIWI) rose to NOK 29.90 just before the holidays, and cost NOK 34.90 this week. That’s a 40 percent increase in just five months.

Norwegians also have long questioned actual competition among grocery retailers, where only a few large players dominate the market. Their owners also tend to show up on tax lists as among the wealthiest in Norway, while Norwegian farmers also enjoy lots of tariff protection from foreign competition.

Frithjof Jacobsen, political editor and commentator in newspaper Dagens Næringsliv (DN), wrote on Thursday that “we’ve never given more money to the farmers, and food has never been more expensive.” He calculated that the roughly NOK 24 billion that farmers collectively received from the state in 2023 boils down to every Norwegian household donating a bit over NOK 9,000 a year. “On top of that come the tariff walls that protect Norwegian products from competition from farmers abroad,” Jacobsen wrote.

Prime Minister Jonas Gahr Støre has repeatedly stated lately that he thinks 2024 will be a better year for consumers, that inflation will ease and households will have more disposable income. Jacobsen chided Støre and his Labour Party, though, for failing to help those with the poorest household economy avoid an anxiety attack at the check-out counter.

Øystein Dørum, chief economist at Norway’s national employers’ organization NHO, thinks the weak krone will continue to drive up prices this year. NHO held its annual meeting this week and economic outlooks were on everyone’s mind.

“Higher salaries and operating margins have taken over as the drivers (of inflation),” Dørum stated in his latest weekly report. “Higher wage costs will be able to keep price growth up, as will the weak krone.” Import prices are expected to rise as well.

NewsinEnglish.no/Nina Berglund

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