Middle class crisis: olive oil price set to go through the roof

Harvests poor across Europe

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The price of olive oil is set to rise again, following poor harvests in several major olive growing areas.

Worst affected is Italy, which has been hit by an infestation of olive flies, on top of a long-standing outbreak of bacterial disease that's infected at least a million trees in the south of the country.

After a poor season in 2014-15 which saw a harvest of just 222,000 tonnes, production rose in 2015-16 to 350,000 tonnes - but is now forecast to fall to just 230,000 tonnes.

Meanwhile, output in Spain, by far the largest producer, more than halved due to exceptionally dry and hot weather; and in Greece, where olive groves have also suffered from pests, production's down from 300,000 tonnes to 220,000..

All this, of course, means that prices will rise.

"During the last four weeks we have seen Italian extra virgin olive oil prices appreciate by over 10% and it is still increasing," Walter Zanre, managing director of oil supplier Filippo Berio tells The Grocer.

"We fully expect to see a repeat of the 2014-15 situation."

One place where the olive harvest does appear to be thriving is Tunisia, which produced 340,000 tonnes of oil - more than five times the previous year. It's now the world's biggest exporter, and the second-largest producer after Spain.

However, olive trees don't tend to produce well two years in a row, meaning that Tunisia too could be struggling to produce enough next year.

And it's not just a shortage that will drive prices up, with all imported products and ingredients set to get dearer.

The prospect of Brexit has damaged confidence in the UK, and hit the pound hard. Analysts are predicting that it's likely to hit parity with the euro by the end of next year - and stay there.

While shop prices haven't risen too much yet, this is largely because companies are still working under existing supply deals and currency hedges.

As these come to an end over the coming months, UK companies will be paying much more for imported goods - and they'll almost certainly have to pass these higher costs on to consumers.


Changes in price since the 1977 Jubilee

Changes in price since the 1977 Jubilee