The world-wide rise in the cost of food has well and truly hit supermarkets and restaurants in Oulu with prices rising so fast that some retailers are altering their prices by hand. ‘Prices have obviously gone up a lot since this time last year,’ claimed one Oulu University student. ‘The government seem to be trying deny this, but the price of milk has increased about twenty percent in two years. The figures are clear for all to see,’ said the student as he shopped in Stockmann.
Milk up by 20 percent
Prices at Stockmann, as with many other supermarkets, have risen markedly since the New Year. The chocolate bar Twix, formerly 52 cents, is now 60 cents – a price increase of almost sixteen percent, way above the government’s official annual inflation rate of 4 per cent. The inflated price of chocolate reflects increased farming costs brought about by a poor harvest as well as a much higher world demand for food.
Milk, around 1 euro last year, is now €1.20, an increase of twenty percent for this staple with nothing like the same increase in salary. ‘People are poorer than they were last year. That’s just a fact,’ said the student as he continued shopping. He also pointed out that the cost of Finland’s two tabloid newspapers was jacked up by twenty percent ‘over night’ last year. Smaller Portions in Restaurants
 The cost of food has also had a clear effect on the restaurant industry. McDonalds in Oulu has increased its prices for the first time in two years – 5 cents has been added to a Big Mac Meal as well as all the other meals. However, the sizes of the portions have been very slightly reduced with even the circumference of a McDonalds hamburger being slightly less than it was as recently as January.
'It’s a very clever trick,’ said one customer tucking into his Big Mac meal. ‘This is about the third time, in Finland, that they seem to have reduced the portions but kept the prices the same. You’re getting less for your money but you can’t be quite sure.’ Prices in Hesburger have also shot up since January and it’s just about possible to make out the old prices underneath the new ones as they are displayed on a menu board with lights behind it. The portions at many other restaurants have also been slightly – and in some cases not so slightly – decreased while the prices have stayed the same or even increased marginally. The ‘Rack of Ribs’ in Oulu’s Amarillo is but a shadow of its former self as is the now miniscule portion of chips that goes with it. However, the price has not gone down accordingly. Taping over the old prices
Smaller restaurant chains, possibly lacking the money to give their prices a professional makeover and concerned at the speed at which food prices are rising, have taken to altering professionally produced menu boards by hand. The ‘Grilli’ on Kirkkokatu is a prime example. The advertisement for its ‘Kerrosateria’ (equivalent of a Big Mac Meal) has remained the same: Double Hamburger, Large fries and drink. However the word large - ‘isot’ – has been unceremoniously covered up with masking tape while the price has been scrawled in black marker pen over the top of the otherwise professional looking board. In another Finnish hamburger chain – on the outskirts of Oulu – every single price box on the menu board has had masking tape put over it and the increased prices written over it in blue biro. In one coffee shop near Oulu city centre, it is now very difficult to get a small coffee as almost all the ‘small coffee’ prices have been covered up. Instead, you can get a ‘large coffee’ from what used to be the small mug before the recession hit in. The Year of the Food Crisis The international media are now calling 2008 ‘the Year of the Food Crisis.’ A number of factors have coincided at once: Global Warming meaning a poor harvest, high oil prices adding to the expenses of all businesses and increased demand for food brought about by the rapid economic development in China and India. The cost of food has been increasing for the last eight years – by seventy five percent since the year 2000 – but it is only this year that the effects are really being noticed. In the last eight years, the cost of bread has also increased by 200 percent. ‘Food thirty years ago or so was far more expensive’ commented one Oulu farmer. ‘It’s been artificially kept low ever since with food imports and intensive farming but now this is changing as the population is so high now.’ In less developed countries, this has led to people not being able to afford the food they need to live and there have already been food riots in Haiti. In India, last year 25,000 farmers committed suicide in desperation after poor harvests. Australia – one of the world’s bread baskets – produced 60 percent less wheat than usual due to its worst drought in a hundred years.
Inflation in Brief
Price inflation is caused by a number of factors. If an important product such as wheat is scarce – due to a poor harvest - then producers charge more for it, pushing up the price. This has the knock on effect of making everything related to it more expensive, pushing prices up in general, leaving everybody with less money which leads to job cuts and businesses folding. If something becomes fashionable it pushes the price up as people try to out bid each other. Also, when governments have to borrow money from abroad – to stimulate the economy – there is more money about which makes the money in your pocket worth less meaning that more of it is needed to buy products.
However, high inflation can also lead to deflation in other areas. This happens when demand for a product goes down, often because people are poorer. According to the ‘Greater Fool Theory’, speculators (‘fools’) buy a product and sell it on at a higher price to an even ‘greater fool’ until they reach the ‘greatest fool’ who can’t sell the product on. He has to sell it at a loss, deflating the product’s price. On a national level this cycle of ‘boom and bust’ can lead, in the worst cases, to economic collapse.
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