Food prices still rising strongly

Since September 2007, Dutch consumers have been paying more for their groceries every month. The 6.3 percent increase in food prices in May 2008 was the largest since 2002.

Price index for food products

Sharp rise in dairy retail prices

Dairy products have the largest effect on the prices of food products. First of all because the price of dairy products has risen by most. Milk cost over 22 percent more in May this year than twelve months previously, cheese and butter cost nearly 19 percent more. In the second place, spending on dairy products accounts for a substantial part of the household food budget: around 14 percent.

Prices of milk, butter and cheese

Higher factory gate prices

The main factor underlying the rise in the retail prices are the higher factory-gate prices, although profit margins and transport costs are also significant contributors. The increase in factory prices of dairy products peaked In October 2007, when they cost 33 percent more than twelve months previously.

Since then the increases have been smaller and in April 2008 factory gate prices were 4 percent higher than one year previously. Consumer prices, however,  were more than 17 percent higher in April 2008 than in April 2007. The large difference in these increases may be caused by the long-term contracts between manufacturers and traders.

Prices of dairy products

Dutch price rises smaller than in eurozone

Consumer prices for food products have risen by less in the Netherlands than in the eurozone. Food prices in the eurozone were 6.6 percent higher in May this year than in the same month last year. In the Netherlands they were 6.3 percent higher.

Herbert van Willenswaard