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According to SEB Bank economist Tadas Povailauskas, stagnant fresh vegetables in May were a consequence of seasonality. According to the interlocutor, food prices are expected to continue falling in June and July.
“We expected those prices to be lower than in April. It is not necessary to look for any miracle, because if we look at history, it generally begins to have a seasonal effect from May, that is, seasonal fresh vegetables, mainly grown in greenhouses, such as cucumbers, tomatoes, lettuce, radishes, early potatoes – this is already a consequence of seasonality.
Naturally, we have seen food prices drop by 0.3 percent. in May and that the decrease in prices will be even greater in June and July, “T. Povilauskas told Eltai.
According to the economist, this year’s trend, when seasonal vegetable prices are falling in May, is not exceptional.
“Last year was exceptional because we did not see much (decrease in food prices – ELTA), the cheapest prices were more notable in July and August, because we had a warm and dry May. (…) The weather is more normal this year, there are no problems here. We have a typical trend this year, “he assured.
According to him, non-seasonal food prices have also been falling recently.
“Dairy products in international markets also became cheaper in May, so it was not logical to increase prices in Lithuania and those prices remained similar. Recall that the pork price bubble has ended since the end of March. pork price began to fall in international markets, these prices no longer increase in Lithuania, we have seen a sharp decrease in the price of poultry in the wholesale market. (…) So we have such a situation that the situation continues to be favorable for the decrease in food prices, “said T. Povilauskas.
“As for the Lithuanian market, it would be difficult to understand why there should be no monthly deflation in June and July, food prices should naturally fall in these months,” added the economist.
Alexander Izgorodin, economist at SME Finance, says that falling vegetable prices have contributed to a slowdown in annual inflation throughout May.
“In February, the annual increase in vegetable prices was 0.9 percent, and since March there has been a large drop in prices. In May, compared to May 2019, vegetables fell in price by a 11 percent. Here’s a very important aspect, because foodstuffs account for about a fifth of Lithuanian consumer spending, therefore the drop in the price of vegetables had a very significant impact on the slowdown in inflation, ”said A. Izgorodinas to Eltai.
According to the economist, vegetables are pinging due to the effects of the coronavirus.
“When Lithuanian hotels and restaurants closed, as well as in Europe, our vegetable growers were suddenly faced with the fact that they had a large supply of vegetables, but demand had decreased considerably. Generally speaking, they had no one to sell vegetables for a couple of months. This has led producers to sell their products at all costs so that they simply sell them so that they do not spoil, ”he said.
Furthermore, according to him, cheaper Polish products could enter the Lithuanian market.
“Polish vegetables could have flowed to Lithuania, because Poles could face the same problem that they have nowhere to sell their products in Poland. They may be looking for other export markets,” said the economist.
According to Izgorodin, the level of food prices is strongly driven by rising fruit prices.
“Compared to May last year, their price increase is 14 percent. This is also largely due to the coronavirus as there is a disruption in the supply chain. We import more fruit,” he said.
The economist predicts that vegetables should remain cheaper until restaurants and hotels become more serious.
“We will see basically the same problem: vegetable growers grow vegetables, there is a harvest that not many people need at the moment.” And hotels and restaurants should open more seriously in July-August, so we will see deflationary pressure in a couple of months, “said A. Izgorodin.
“But I think that will change in the second half of the year,” he added.
According to the Statistics Department, in May, compared to April, the prices of some fresh fruits and vegetables changed the most: the prices of cucumbers, tomatoes, early white cabbage, head lettuce decreased more, but melon prices , kiwis, sweet peppers and tangerines increased.
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