A trip to the supermarket is getting more expensive: why prices for bread, dairy products and vegetables are rising

Ukrainians don’t need to read the news to find out about the rise in the price of basic foodstuffs. A trip to the nearest supermarket in recent days has unpleasantly surprised everyone who is used to planning their expenses and has a limited budget for food purchases. The price of bread, dairy products, especially butter, meat and confectionery have risen significantly. The war has been a long-term shock to the Ukrainian economy. This is understandable, but other factors, including logistical difficulties, changes in export policy, and problems with the harvest, also contribute to the price increase.

Why is bread getting more expensive?

Yuriy Duchenko, president of the All-Ukrainian Association of Bakers and chairman of Kyiv Khlib, commented on this issue on the Ministry of Finance ‘s website.

According to him, bread prices have already risen by 5-10% in October, as agreed with retailers. At the same time, the real increase in costs for bakery producers is much higher than the new prices. Consequently, supermarkets have not yet reflected the full price increase in this category.

Dudchenko stressed that all components of bread production costs continue to grow. It is expected that by the end of the year, prices for flour will increase by 11%, for packaging by 10%, for logistics by 8%, for gas by 11%, and for electricity by 11%.

Duchenko emphasised that prices for all bread cost components continue to rise. For example, by the end of the year, prices for flour are expected to increase by 11%, packaging by 10%, logistics by 8%, gas by 11%, and electricity by 11%.

Infographic: IA FACT

He also noted that although the new wheat harvest has already been harvested, the situation with flour has not improved, but rather worsened. Last year’s food wheat stocks are exhausted. And most of the new wheat harvest is exported, causing a shortage on the domestic market. As a result, prices for milling wheat are rising, and suppliers are often holding onto it in anticipation of even higher prices.

The rise in bread packaging costs is linked to currency fluctuations, as many of the materials used for this purpose are purchased abroad and are subject to exchange rates. The rising cost of logistics is linked to the shortage of drivers, which is forcing companies to raise their salaries to retain staff.

If bread prices are not raised by another 10-15% in the near future, producers will lack the funds to buy raw materials. As a result, production will decline.

It is noteworthy that bread consumption in Ukraine has also declined. Over the past year, people have bought 5% less bread. Each price hike causes a halt in consumption and its volume falls. Then people get used to it and the demand for bread levels off.

Yuriy Dudchenko promises that in November bread prices will rise for the last time, and in December the price increase will be put on hold.

The forecasts for other price tags for popular products are also disappointing.

The deputy head of the All-Ukrainian Agrarian Council, during a briefing at the Ukraine Media Centre, said that prices for basic foodstuffs would rise by 10-15% during the autumn-winter period. The biggest price increases are expected for vegetables, dairy products, eggs and chicken.

Why did food prices rise?

There are many reasons. One of the key ones is this year’s drought. This summer’s abnormal heat caused a 12% decline in grain and oilseed harvests. This year’s significant climate change also affected the yield of fodder crops. This led to a decline in milk production. As a result, prices for dairy products rose.

The drought also affected vegetables, which require abundant watering. Insufficient irrigation led to a shortage of tomatoes, cucumbers and vegetables for borscht. Prices rose accordingly. Due to the heat wave, water tariffs for farmers increased, which had a corresponding impact on the final prices for consumers.

Infographic: IA FACT

In addition, since the outbreak of the war, crops have declined. In particular, there is a significant shortage of potatoes. According to the Institute of Potato Growing, the cultivation of this crucial vegetable for the food supply has decreased by 36%.

The occupation of some regions of Ukraine has also had an impact.

The seizure of the territories of Kherson, Zaporizhzhia and Mykolaiv regions has significantly complicated vegetable growing. It was in these regions that irrigation systems were set up to ensure watering of vegetable crops. They have become inaccessible due to the occupation. Industrial vegetable growing has moved to the central and western regions, where irrigation systems are much less developed. As a result of the temporary occupation, Ukraine has lost areas that are optimal for growing specific crops. For example, carrots were traditionally grown in Kherson and Mykolaiv regions. Now it is sown in other regions where it does not produce the usual yields.

Another reason for the deteriorating situation is power outages.

Greenhouses in Ukraine are mostly covered with film, not glass. This makes the quality of the vegetables grown there dependent on the supply of electricity. The same reason directly affects the ability to grow seedlings and harvest early vegetables.

Experts also point to the high cost of electricity as one of the main reasons for the rise in the price of bakery products.

Logistical problems in Ukraine also have a significant impact on the food market, including the storage and transportation of grain and vegetables. With constant power outages caused by shelling, there may be a situation where grain and vegetable storage facilities are unable to maintain the required temperature conditions. This will result in the loss of a significant portion of the harvest and higher storage and transportation costs, which in turn will drive up prices.

Inflation is breaking all records

The inflation factor cannot be discounted. According to the draft Budget of Ukraine for 2025, it is projected to reach 9.5% next year.

Infographic: IA FACT

This figure is higher than expected for 2024, when price growth was estimated at 7.9%. The inflation rate will be influenced by the limited supply of certain food products and by core inflation, which is already showing more rapid negative changes than expected. The reasons for these changes are higher business costs for raw materials, energy and labour.

The price level will also be affected by tax increases.

Disappointing forecasts point to increased price pressure, which could further complicate the situation for consumers and businesses in Ukraine over the next year.