Oil price goes down, global food prices up

Oil price goes down, global food prices up
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In June, annual inflation rose slightly (to 3.0%). The drop in fuel prices was compensated by a rise in food prices and, furthermore, service prices continued to increase. Thus the inflation figure in June was hardly a surprise.

Fuel prices at Latvian petrol stations at the beginning of July dropped to their lowest level this year.  For instance, the price of diesel did not exceed one euro per litre for the first time in thirty weeks. That was primarily a reflection on the decrease in oil prices, which, in June, fluctuated between 45 and 50 U.S. dollars per barrel. The market actively reacted on conflicting announcements on U.S. oil production and inventories data, yet the overall price trend was descending: if, at the beginning of May, the market “bears” cautiously tested the $50 price floor, then, shortly before Midsummer, Brent oil was briefly traded for under $45 per barrel. Moreover, the U.S. dollar has slightly weakened against the euro, which further diminished the price of oil products in euro.

Global food prices rose in June. In several countries of the European Union (EU) and Ukraine draught conditions set in. Consequently, wheat harvest in these important wheat exporters may be lower than predicted before. The limited global supply, in combination with the sustained demand, brings up the prices of meat and dairy products (butter in particular).

Service prices keep rising gradually. In part, this is determined by the higher incomes of the population and the subsequent higher demand. In part, it is also impacted by one-off factors (whose influence might not have been as great if the purchasing power of the population were not on the rise). If the appreciation of automobile transport vehicle insurance was a crucial one-off factor in spring, the mobile phone service tariffs rose substantially in June (formally, this was related to the lifting of the guest subscription price in the EU). 

APA: Krasnopjorovs, O. (2023, 01. dec.). Oil price goes down, global food prices up . Taken from https://www.macroeconomics.lv/node/3838
MLA: Krasnopjorovs, Oļegs. "Oil price goes down, global food prices up " www.macroeconomics.lv. Tīmeklis. 01.12.2023. <https://www.macroeconomics.lv/node/3838>.

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