Consumer prices have been rising sharply for some time now – to the point that the year-on-year figures from the Central Statistics Office no longer give us the full picture.
Looking instead at the change in prices between July 2021 (just as inflation started to pick up) and July 2023, we can see that consumer goods have, on average, gone up by 15.5%.
That's a significant loss of buying power in the space of just two years.
However some products have seen sharper price increases than others – particularly shopping basket staples like sugar and flour.
How much the price of sugar has risen by?
We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences
According to data from the CSO, the price of sugar has risen by more than 49% in the two years to July.
It’s by far the biggest increase in a grocery item, going by the consumer price index.
It is coming from a low base – a bag of sugar was relatively cheap to begin with – but in percentage terms it’s gone up a lot.
And it also has a knock-on effect on many other consumer items, because it’s not just about the bag of sugar you might buy to do some baking.
As the price rise is reflective of a higher cost for the raw material, it means any consumer goods that use sugar are impacted too.
Cakes, chocolate, fizzy drinks, biscuits are all obvious examples of that. But there are plenty of other things you might not immediately think of, like jars of sauces, jams, some cereals, maybe yoghurts.
Often products that say 'fat free’ actually have a lot of sugar in there to boost the flavour, so they would be affected too.
And sugar can be used as a preservative or in the fermentation process for things like brewing, meaning a higher price has a broad impact on our grocery list.
More expensive sugar is a contributor to the more-than-20% rise in soft drinks prices in the past two years, for example.
Preserved fruit and fruit-based products are 23.5% dearer than two years ago. Confectionary product prices are up more than 18.5% in the past two years.
What about flour?
Flour and other cereal prices are more than 20% higher in the past two years.
Not as dramatic as sugar – but still ahead of the 15.5% increase in overall prices in the past two years.
Again, this is a product that’s going to have a knock-on effect on so many other things.
Cakes are an obvious example; but also breads, wraps, pizza, pasta and cereals.
According to the CSO, pasta products and couscous prices are more than 30% higher in the past two years, while bread prices are almost 21% higher.
So what’s going on?
There are a multitude of factors at play – and the higher cost of energy is of course always a factor in this.
Taking sugar as an example, to make it you have to extract juice of the sugar cane or beet, boil that until you get crystals, spin that off to get rid of the syrup and then warm it up to dry it out.
They’re all steps that require a lot of energy – and if that’s more expensive to use, then that gets passed on to the buyer.
But another big factor has been the changing global climate.
India is the world’s biggest producer of sugar – but it’s been hit by a number of unfavourable weather events in the past year.
Heavy rains at the start of the year forced producers to stop the harvest almost two months earlier than normal – because there was less suitable crop to actually take.
Something similar happened in Brazil, the second biggest producer; its harvest was delayed earlier this year by heavy rains.
Ironically the Indian crop is now suffering from the opposite problem – because monsoon rains have been well below average, which is impacting the next crop.
That may have consequences with the amount the country can harvest next year and even into 2025.
And the situation is so bad that India is now expected to announce a ban on sugar exports, which will kick in from October.
That’s led the market price of unrefined sugar to hit a 12 year high – because it would effectively take the single biggest producer of the product off the table.
Will that impact supply in Ireland?
Ireland is not too dependent on India for our sugar – there are European import tariffs in place that make it more expensive to buy sugar from outside of the EU.
As a result our big source of sugar is Britain, closely followed by the Netherlands, then France, Germany and Belgium.
Our sugar imports from India have actually jumped in the past two years, but they still only account for about 2.3% of the value of the sugar we buy in.
But despite that, what happens in the likes of India or Brazil is still going to have an impact on the Irish market.
Not necessarily supply – but certainly price.
Because if Indian sugar becomes more expensive – or simply impossible to find – other markets that would have been more reliant on it will start to look elsewhere to find a new source. That means the competition for British, Dutch or German sugar goes up.
And if you’re a producer in Germany, and you see that you can suddenly get a higher price for your sugar than you did last year or the year before, you’re going to take it.
In fact it was expected that European sugar production would pick up this year, because of the high price. Companies saw an opportunity to make more money, and increased the amount of sugar beet they were growing as a result.
So European producers are just taking advantage of what’s going on elsewhere?
Because the reality is that European beet growers have also been dealing with adverse weather conditions of their own.
We know we’ve had heat waves on large parts of mainland Europe in the past two years – and that’s damaged the sugar beet crop.
But rain has also been an issue – heavy rains in the spring delayed the planting of the crop in many countries including France and Belgium, which is likely to dent the yield they will enjoy as a result.
Adverse weather denting harvests isn’t a new thing – it has happened on and off through history - but what’s different now is the frequency with which it’s happening.
It’s quickly going from being an irregular occurrence to the norm.
And climate change is impacting sugar prices in a different way…
Yes; an unintended consequence of an attempt to change things for the better is that much of the world’s sugar production is being diverted to more sustainable causes.
Because the climate change challenge has prompted companies and countries around the world to seek more environmentally friendly alternatives to fossil fuels – biofuels being one example.
And sugar is a key ingredient in many biofuel types.
Ethanol, for example, is made using sugar.
Demand for that recently doubled in Ireland, because the E10 petrol that we now get at the pumps is 10% Ethanol, as opposed to the 5% that went into the E5 type that we used to use.
Biobuthanol – which has been suggested as a future alternative to petrol and diesel – can also be made using sugar.
And so sugar crop growers are often finding that they’re getting a better price for their output if they direct it towards biofuels, rather than the grocery market.
In fact another factor in India’s exports of sugar dropping is an aggressive policy by its government to boost biofuel production, by diverting its sugar crop to that market instead.
Is it a similar story for flour?
Wheat can be used in the production of biofuels, but it’s generally not the go-to ingredient.
What could affect supply, though, is if farmers switch from wheat to other, more bio-fuel friendly crops.
But even if they stick with wheat, they’re facing the same weather related issues as sugar – which is contributing to the price increase.
In recent years Canada, a major global supplier of wheat, has faced heatwaves and wildfires which has significantly reduced its crop.
It’s suffered from drought again this year, which is expected to negatively impact yield.
The only saving grace is that Canadian farmers planted a bumper crop this year because they wanted to take advantage of higher-than-usual prices, and so they may still manage to end up with a bigger yield than last year, even if a high percentage of their crops fail.
High temperatures and dry weather have also been a problem for producers in mainland Europe.
Ireland’s main source of flour is Britain – but it’s the wet summer that’s the issue there.
Wet fields makes it harder to harvest and can also lead to quality issues in the wheat.
And in the background of all of this is the situation in Ukraine.
Ukraine and Russia were once a major source of grain globally – but that was disrupted in the early months of the war.
The situation improved for a time following the grain deal between the two sides, but Russia has now walked away from that
That means there is fresh uncertainty about Ukraine’s ability to export its produce to other countries.
Do we need to be so reliant on other countries for these products?
In theory, no. Because Ireland can grow its own wheat and sugar beet.
There is a relatively small amount of wheat grown here at the moment – you can find some artisanal suppliers of native flour.
Last year that Minister for Agriculture Charlie McConalogue even called on farmers here to grow more grains to try to counter-act a shortage coming from Ukraine and Russia.
Figures from the Irish Farmers Journal suggest there was a bit of an uptick in response to that, with the country’s tillage area rising by 6% in 2022.
It has fallen back somewhat this year, but either way it was nowhere near enough to make the country more self-sufficient.
On the sugar side, there hasn’t been a commercial sugar beet crop in Ireland since 2006.
Greencore, the company that was once Irish Sugar, is now more focused on pre-packed sandwiches and ready meals.
There was a lobby group, Beet Ireland, established in 2011 to try to revive production. Doing that would would require finding enough farmers to grow the crop, and for a new processing plant to be set up.
But it postponed its campaign in 2019 – saying there wasn’t sufficient interest from would-be growers to establish a supply that would make it competitive at a European level.
It’s been claimed that feasibility studies have also put the cost of re-establishing production at between €250m and €400m, so there would need to be a strong business case to make that viable.
But our overseas reliance for both flour and sugar do raise an interesting question – one that’s being reflected across Europe, and the wider world, in a range of different areas.
The aim of globalisation was to have a global supply chain where countries could tap into others’ expertise and efficiency. This would effectively allow you to outsource production to somewhere faraway that can do a better (and maybe cheaper) job.
But the pandemic, and the war in Ukraine, have highlighted just how fragile these supply chains are – and how exposed a country can be when something outside of its control happens; possibly on the other side of the world.
As a result there have been many conversations in recent years about the need to reduce reliance on other countries in critical areas.
Computer chips is a great example of that – as both the EU and the USA separately have developed multi-billion dollar plans to bring more processor chip production on-shore, so they’re not reliant on Asia for these vital components.
And certain areas of our food supply may form part of that conversation – especially now that Ireland is heavily dependent on non-EU countries for basic goods like wheat and sugar.