The impact of food prices on inflation in Slovakia is one of the highest in the EU. Marián Kočiš, macroeconomic analyst at Slovenska sporiteľna, stated this in his analysis. "We see two factors in particular here, namely a higher weight of food in the overall consumption basket and faster growth in food prices, which has been driven by higher growth in prices of agricultural inputs," he said. "Since the weight in the consumption basket will simply not change, the dynamics of food price change will be mainly influenced for the rest of the year by the lagged effects of the high energy commodity prices of last year, according to him. Lower gas and electricity prices will make fertiliser production in particular cheaper, reducing the price intensity of agricultural production and thus dampening the growth, or at least the rate of growth, of food prices," he explained. He noted that food prices in the country were growing at 29% year-on-year in December 2022 and are around that level today. The almost one-third year-on-year growth in prices puts us in fifth place in EU terms, behind Hungary and the Baltic countries. In general, according to the analyst, the higher the average income in a country, the proportionally smaller part of their salaries people spend on food. "While in our country food weighs almost a quarter of the consumption basket, in the EU it averages less than 16% and in neighbouring Austria only 11%. Czechs spend 19% on food. So while food contributed 6 percentage points to year-on-year inflation in Slovakia in December, in neighbouring Austria food contributed 2% to overall inflation, while food prices there rose by 16% year-on-year in the same period," he added. The second factor is the price growth itself, which is higher here. We see the higher absolute year-on-year food growth as being primarily driven by higher year-on-year prices of agricultural inputs. According to Eurostat data, the price level of agricultural inputs in Slovakia rose by 39% last year compared to the previous year, which was above the EU average (32% year-on-year). Farmers in Latvia (68%) and Hungary (52%) recorded the highest year-on-year difference in input prices.
Source: TASR
