Olive oil prices surge 52% in a year in Spain and keep food inflation high

If there are two purchases which the public have noticed the difference in price on most this summer it has been olive oil and fuel. Both food and fuel are now the weakest link for inflation in Spain. The final figure for inflation for August in Spain was 2.6% (0.3 points more than in July) and 6.1% for the core, underlying rate (0.1 less than the previous month), according to the INE government statistics office.

It is olive oil, such a staple of Mediterranean life, that stands out in the supermarket for the change in price. In just the 31 days of August, this basic product rose by 8.7%. A litre of oil cost between eight and ten euros by the end of last month. In many supermarkets bottles of olive oil have a security tag on now to prevent theft.

When this latest rise is added to all those in the past year, the rise in olive oil price is 52%. This is the biggest year-on-year increase in olive oil in two decades.

Olive growers have been warning that the drought over the last two growing seasons was going to push up the price as less oil is being pressed. Minister of Agriculture Luis Planas has said only a period of very heavy rains (for a month non-stop, he said) could alleviate this situation. Prices are so high that many consumers are now opting for other products, such as sunflower oil.

As a result, Spanish food inflation overall is stubbornly high. Although the year-on-year rate fell in August to 10.5% (compared with 10.8% in July), the average cost of basic foodstuffs has been rising significantly for almost a year and a half, always above 10%. In the last 17 months, food inflation has never fallen below double-digits.