The expert on the triple whammy of the economy: Food could become more expensive

Isaac Turner

Updated 10.18 | Published 10.01

            

           Iran has struck against gas and energy facilities in neighboring countries. Photo: AP

The stock market is falling, the oil price is fluctuating and gas prices are rising.

The triple whammy of the economy could soon make food more expensive.

– It hits households directly, says expert Thina Saltvedt.

Attacks on gas and energy facilities and the closure of the Strait of Hormuz continue to hit the economy. The price of oil has surged to almost $113, SEK 1,100 per barrel, gas prices have risen by 27 percent and the Stockholm Stock Exchange fell by over two percent on Thursday morning.

If this continues, Swedish households will feel the effects – quite quickly.

– The first thing you notice is that prices are rising at the pump. The costs of transporting all goods are increasing and everything from food to imported products are affected. Airlines will eventually have to pass on cost increases to customers, says Thina Saltvedt, energy analyst at Nordea.

          

         Energy analyst Thina Saltvedt at Nordea. Photo: Nordea

Food prices may rise

But in addition to the fact that the cost of food transport may be higher, rising oil and gas prices also affect production at home.

– Fertilizer, for example, is affected, as is production itself. Both by energy costs and fuel for agriculture and transport, says Thina Saltvedt.

How quickly will this be reflected in food prices?

– It usually takes a few weeks. There are stocks and it takes time to adjust prices. But distributors have already become worried that they will have to raise food prices.

Worst-case scenario

This could in turn affect Swedish inflation.

– This is also something that central banks are worried about. They have just started to get some control over inflation and then this comes on top – as a new inflation risk, says Thina Saltvedt. 

What is the worst-case scenario?

– The worst-case scenario we have started to see is that oil and gas infrastructure becomes a target in the war. Then there is the risk of long-term damage that knocks out production. This would lead to high oil and gas prices for a longer period.