Olive Oil Shortage in Spain Pushes Prices Up, Future Harvest Looks Grim

Data from Spain's National Institute of Statistics (INE) reveals notable annual price increases in various food categories, with fresh legumes and vegetables (+13.2%), fresh fruits or refrigerated items (+11.8%), and potatoes (+10.2%) experiencing double-digit growth. Olive oil prices surged due to a 50% reduction in production during the last season caused by extreme drought conditions. The current 2023-2024 season is also expected to yield below-average harvests, contributing to the price increase.

Conversely, certain products saw price decreases compared to December 2022, with other edible oils (excluding olive oil) leading with a 29.1% drop. Skimmed milk (-2.1%), flour and other cereals (-2%), pasta (-1.6%), and whole milk (-0.1%) also became more affordable.

Sunflower oil, in contrast, experienced a price drop due to ample availability in the global market. The Spanish government, in response to rising food costs, reduced and eliminated VAT on essential items in 2022, a measure extended until June 2024. The Congress of Deputies recently approved the VAT reduction extension, including the elimination of VAT on oil, effective upon the completion of the associated legislative process.