Food Prices Set to Rise in Coming Months, Analysts Warn

The latest data on producer prices in agriculture indicates a potential increase in food prices in the coming months.

However, despite this uptick in agricultural costs, experts do not anticipate a return to the widespread high inflation seen in previous years.

In October, agricultural producer prices saw a 2.4 percent year-on-year increase, marking the first growth in 17 months.

“The period of price declines in agriculture has ended for now. This shift was initially observed in meat prices, and now the downward trend in plant-based products has also halted. Food producer prices—and subsequently, retail prices—have started to rise,” explained Petr Dufek, Chief Economist at Creditas Bank.

Radomír Jáč, Chief Economist at Generali Investments CEE, also pointed to the expected rise in food prices.

“The trends in the food industry reinforce expectations that food prices for final consumers will continue to increase, potentially accelerating toward the end of the year. In general, food prices will likely be one of the key drivers of inflation in the Czech economy as 2023 ends,” he said.

Despite these rising costs, analysts pointed out that price growth in the industrial sector remains weak, and the construction industry is not seeing dramatic increases either.

“Construction prices are growing more slowly than overall inflation. While consumer prices rose by 2.8 percent year-on-year in October, material and product costs in the construction industry rose by only 0.8 percent, and the price of construction work increased by 2.3 percent. The slower, more stable price growth in construction is a positive development, as it encourages more interest in renovations, which help reduce household energy costs,” said Libor Vošický, Chairman of the Board of Directors of Stavební spořitelna Česka spořitelna.

Overall, analysts do not foresee a significant rise in inflation. While there may be price shocks for some specific products, they agree that the current data on producer prices does not suggest inflation will spike to the levels seen in recent years, when it exceeded 10 percent.

“This is not an inflation surge, though some consumers may be surprised by price hikes for certain items,” Dufek concluded.

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