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Butter prices are falling. The analyst explains what’s next. “We should not be guided by promotions”

Data from the Ministry of Agriculture show that packaged butter prices in the first half of January decreased by about 30 percent. and were the lowest since October 2021. Where did these reductions come from and can they be sustained? Trade News analyzed the prices, and those in many supermarkets are quite low – you could buy butter at promotional prices in one of the chains in January even for PLN 3.99.

– Data available at the end of January, relating to prices in stores, also indicate decreases, although on a much smaller scale. According to the Central Statistical Office, in December 2022 retail prices of butter decreased by 0.3%. month to month. This was the first price drop on a monthly basis since March 2021, comments quoted by Wiadomo¶ci Handlowe Mariusz Dziwulski, PKO sector analyst Bank Polish. He also emphasizes that “butter prices on an annual basis were still significantly, 22 percent higher”

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Butter prices are falling. An expert on causes

One of the reasons for the decline in butter prices may be a decrease in supply on the EU market. The Community is the second largest producer and exporter of this product in the world.

– Changes on the supply side are superimposed on weakening demand. A strong increase in butter prices in the conditions of high inflation and slowing economy could have resulted in limiting its purchases. The presence of close substitutes for butter on the market makes it easy for consumers to buy vegetable spreadable fats or fat mixes – diagnoses Dziwulski. It also points to the decreasing demand of the HoReCa industry (e.g. hotels and restaurants).

In response to the question about what to do with prices, the expert stated that the more likely scenario is a decline in price dynamics. – It is not certain whether we will see price decreases on an annual basis – he says.

Butter is also cheaper on the western border of Poland. At the peak of the increases, according to Deutsche Welle, a pack of butter cost 2.29 in Germany eurodiscounts are currently up to 20%. In discount stores, a 250-gram cube costs 1.59 euros.

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What’s next? Analysts cool the mood

The expert believes that the declines in food prices, which are visible for some goods, no oznaczaj± trend changes.

– We should also not suggest promotions for products, because discounters are forced to get rid of the goods lying in warehouses. Soon, companies will also face increases in energy and heating prices as well as changes in VAT, which will result in an increase in food prices – says Marcin Stradowski, partner at Foodcom SA, in an interview with Strefa Biznesu.

– On the other hand, we will be able to talk about a real slowdown only when the downward trend continues for at least a few months. Price increases may be limited by reduced demand caused by consumers’ lower purchasing power, resulting from the fact that they pay more for everything, he adds.

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