DNB warns higher energy costs could lift food prices later

Dutch food prices could rise again as higher energy costs feed through to production and transport, De Nederlandsche Bank (DNB) says. The warning comes as some groceries have become cheaper even while inflation has increased.

Food prices were lower on average over the past three months than a year earlier, according to the ANP report carried by Nieuws.nl. DNB says this reflects lower costs earlier in the supply chain: generally good European harvests last year reduced agricultural prices, which reached supermarket shelves later because food producers often use long-term contracts.

In September, semi-skimmed and skimmed milk were 7% cheaper than a year earlier, while beef was 8% cheaper, the report says. DNB describes the recent fall in food prices as unusual. It has occurred only once since 2016, in 2021.

But energy prices have risen sharply following the war in the Middle East, increasing costs for producing and transporting food. “That effect will gradually be reflected in food prices,” DNB says, in a translation of its statement reported by ANP.

International food-market prices are another influence that reaches shop prices with a delay. They rose in September to their highest level in nearly four years, according to the UN Food and Agriculture Organization, the report says. DNB cautions that recent cheaper groceries are no guarantee that prices will continue to fall.