Brits are paying more for olive oil as prices begin to surge in supermarkets.
In Tesco, prices for own-label olive oil and extra virgin olive oil bottles rose between 11% and 32.3% over the first week of July, research by The Grocer using Assosia data shows.
A 250ml bottle of extra virgin, which on 4 July cost £1.70, was by 6 July priced at £1.90, a jump of 11.8%, while one-litre bottles of classic or mild/light variants rose by almost a third, from £3.25 to £4.30.
On a cost-per-litre basis, that left Tesco 55% more expensive than German rival Aldi, which was charging £2.79 for a one-litre bottle of classic on 6 July. The Grocer has approached Tesco for comment.
Ged Futter of The Retail Mind suggested the increases went “against Tesco’s own promises about limiting the impact of inflation on shoppers”.
“On olive oil they have gone first and highest,” said Futter.
However, Sainsbury’s has since matched some of Tesco’s increases to the penny. It has hiked the price of a litre of classic olive oil and extra virgin from £3.40 and £3.95 to £4.30 and £4.65 respectively, the data shows.
“While prices can go up and down for a range of reasons, we’re committed to offering our customers great choice and value when they shop with us,” said a Sainsbury’s spokeswoman.
Paul Stainton, a former Aldi and Co-op executive, now with Europe-wide retail branding specialists International Private Label Consult, said it was “a bit of a surprise that they [Tesco] moved ahead after claims they are trying to protect consumers from inflation”.
“They’re now way ahead of Asda, Morrisons and Aldi,” Stainton said.
At the time of writing, Asda was charging £3.20 for a litre of classic olive oil and £3.50 for the same amount of organic extra virgin online, while Morrisons’ prices were £3.49 and £3.99 for a litre of standard and extra virgin respectively.
“Maybe [Tesco] have had problems with contracts, maybe they have used up a lot of their stocks already due to demand shifting, shortages of other oils”, said Stainton, who suggested “the shortage of sunflower oil might have had the knock-on impact of sending consumers towards buying more and more olive oil”.
Olive supply contracts are usually negotiated once a year and based on Europe’s annual harvests, which take place between October and February.
Prices of edible oils the world over have soared in recent months, with a pronounced spike in the weeks following the invasion by Russia of Ukraine, the world’s main sunflower oil source.
At the same time, supplies have tightened, with demand for olive oil climbing after the near-disappearance of Ukrainian sunflower oil in March and April and the subsequent month-long ban on most exports of palm, the world’s most-used oil, by Indonesia, source of over the half the world’s supply.
While the worst of the oils’ supply crisis looks to be over – prices have come down again in recent weeks after Indonesia lifted the exports ban and as some Ukrainian sunflower exports resumed overland – overall prices at commodity level are still significantly higher than previous years.
Last week the Food and Agriculture Organization of the United Nations said there had been a 7.6% month-on-month drop in global edible oils prices in June – yet this still left the index 34% higher than a year ago and 113% above 2020.
In the meantime, suppliers, including Filippo Berio UK, have warned that drought in southern Europe, and in northern Italy in particular, could hit this year’s olive oil crop should the current dry period run on into late summer.
Olive oil prices might be rising in Tesco, but the retailer has gone head to head with suppliers in pricing disputes on other products over recent months.
Notably, it has faced off against Mars and Heinz, which stopped supplying some products to the supermarket giant after it refused to raise prices, citing concerns about rising inflation. Heinz and Tesco have now resolved their dispute.
In regards to both disputes, Tesco argued it had “a responsibility to ensure customers get the best possible value, and we will not pass on unjustifiable price increases to our customers”.
Consumer price inflation in the UK topped 9% in May, according to official data. Last week, the Paris-based OECD said food price inflation across Europe, the UK included, hit an average of 12.6% the same month, running ahead of the continent’s wider CPI. The UK’s June CPI numbers are due for release by the Office for National Statistics next week.
