Olive oil is the latest commodity to see prices spike to record highs.
The average price in August was 130% higher than a year earlier, surpassing levels not seen since 1996.
“Consumer and cultural preferences for olive oil make it difficult to substitute despite plentiful supplies of other vegetable oils,” the USDA said.
Olive oil is the latest commodity to see prices jump to new highs thanks to severe weather conditions.
According to the United States Department of Agriculture, global olive oil prices spiked to $8,900 a ton in September as extremely dry weather in the Mediterranean raised the risk of supply disruptions.
“The average price in August was 130 percent higher than the year before, with prices quickly surpassing the previous record of $6,242/ton set in 1996 with no sign of easing,” the USDA said.
“While prices have moderated consumption somewhat, consumer and cultural preferences for olive oil make it difficult to substitute despite plentiful supplies of other vegetable oils,” it added.
The spike in the price of the beloved cooking oil and salad-dressing essential follows similar cost jumps in several other food commodities – including cocoa, orange juice, wheat, and soybeans.
The cost surge in these commodities threaten to set back the Federal Reserve’s efforts to tame US inflation. The annual pace of consumer-price increases came in at 3.7% in August, well below last year’s highs above 9%, after the central bank lifted benchmark interest rates by more than 500 basis points since early 2022.
“While the intense price hike in the market will assist in further tempering demand this season, carrying to the next year will be scarce, especially in the EU (the largest olive oil producer, consumer, and exporter). This will keep prices elevated into 2023/24, especially if the next harvest is similarly impacted by poor conditions,” the USDA said.