Olive oil prices have been tipped to rise by as much as 25% by the year-end as Spain’s heatwave continues to damage production levels, according to one of the UK’s largest supermarket suppliers.
Spain accounts for almost half of global olive oil, making 1.4mln tonnes per year. This is expected to sink to around 1mln in 2022.
Extra virgin olive oil was 7.3% more expensive in July compared with the previous month but has been forecast to go between 20% and 25% higher when supermarkets renew contracts.
Acesur, which sells 20,000 tonnes of olive oil in the UK each year, insisted the heatwave has had a “drastic” effect on production.
Price hikes will be felt by consumers when new contracts are signed in the next three to four months, the BBC reported.
Additionally, Italy has been experiencing its worst drought in 70 years, meaning its annual olive oil production may fall 20% to 30%.
Earlier this year, crisp and chip companies were forced to change recipes when sunflower oil production took a colossal hit (read more).
Ukraine and Russia used to produce 80% of the world’s sunflower oil but supplies from the region have been severely disrupted by the war.
Hospitality will feel the biggest impact from the higher costs as they have teh least scope to pass them on to consumers.
A survey today by Barclaycard said households spent 1.5% less on eating and drinking in July compared to a month earlier with the impact of rising prices on incomes blamed.