Climate change hits fruit prices

This month seven out of 10 categories saw month-on-month deflation in December - a remarkable number for the festive period, which is historically a time of food price increases.

The Soft Drinks and Fruit categories saw large falls month-on-month, at -16.4% and -10.2% respectively. The Fruit category is still seeing huge increases year-on-year, with a+ 10.3% rise on December 2018. This increase is largely due to multiple instances of extreme weather as a result of climate change, which have been damaging the growth and yield of fresh produce.

Spain has been hit by devastating early winter storms which have significantly damaged citrus yields and delayed many crop deliveries. The storms are particularly damaging for Valencian and Alicante Citrus, and producers have had to stop harvesting as the fruit cannot be stored in the very wet conditions due to the risk of fungal infections. This has caused a 20% reduction in the volume of oranges and up to a 50% decrease in Mandarin production in comparison to last season. This slow production of citrus crops has also been observed in other countries such as Italy and Morocco.

In stark contrast to the Fruit category, the Vegetables category is down -3.6% year-on-year. It is unusual for the fresh produce categories to be so far apart in their inflation numbers. However, due to a good harvest for both potatoes and onions the Vegetables category continues to fall both year-on-year and month-on-month. This time last year, the UK reported its smallest potato harvest for 6 years, after extreme heatwaves over the summer damaged crops. This low yield saw prices soar, which coupled with this year’s high yield and low pricing, has been a major contributor to the deflation in the category.

Elsewhere, the Oils & Fats category

continues to see high levels of deflation. Good conditions for dairy production has resulted in high yields of milk, which has reduced butter pricing both locally and on the global market This reduction in the cost of butter has done a great deal to ease the pressure of very high inflation seen across the category in 2018, with pricing in December this year measuring -11.6% lower than last year.

As usual in December, both Meat and Fish prices saw a particular surge during the month.

Spain has been hit by devastating early winter storms which have significantly damaged citrus yields and delayed many crop deliveries. The storms are particularly damaging for Valencian and Alicante Citrus.