Why Are Oil Prices On the Rise?

June 14, 2023

Whether you like cooking with oil in the home or in the workplace, this versatile product is considered to be liquid gold. Not only can you use it to fry up your favourite meal and roast the perfect potatoes, but you can also dress a variety of different salads – just in time for the summer season. However, with the price of olive oil, especially, rising considerably, it’s time to look for alternatives. But why are prices rising and how is everyone coping with it?

Why are cooking oil prices rising?

Everyone has noticed a dramatic jump in the cost of their weekly food shop. But where some food items remain at a reasonable cost, others have sky-rocketed, such as cooking oil. The BBC states that vegetable oil has seen a huge 65% price increase in just one year, leaving households and businesses alike to adapt and seek out cheaper cooking alternatives.

Where this is slightly easier for domestic households, switching to budget supermarkets in a bid to save some cash, it’s not as straightforward for business owners in the food and drink industry. They face a dilemma whereby if they are forced to pay increased cooking oil prices, they’ll have to up the cost of their food and drink, which could put customers off if it’s raised too sharply.

However, if they don’t raise their prices enough, they could end up losing out on much-needed profit. So why has the price of cooking oil risen so much in the last year and what are business owners doing to offset it?

Supply chain issues & climate change are partly to blame

The BBC claimed that rising oil prices could be as a result of intense heat waves hitting Spain. Spain, according to the same article, produces almost half of the world’s olive oil, so if their crops are badly affected by the weather, it results in a long-lasting shortage of the product. As a result, the price of olive oil goes up, and it continues to rise, mainly because the problem faced last year shows little signs of ceasing. Climate change will result in harsher winters and hotter, dryer summers, so is this something the world will have to adapt to?

Inflation could also be contributing factor

An article by the BBC states that inflation could be another reason for the rise in cooking oil prices. At the start of the year, housing, bills and food were the top three everyday costs that were set to face a considerable rise as a result of exponential inflation hikes, the likes of which haven’t been seen since 1982.

Also within the aforementioned article, it was reported that Kelly Hill, a hairdresser from Stafford, had to move back in with her parents in order to save money, claiming that they used to do their food shopping in Tesco before noticing a considerable jump in the cost of their weekly shop. They’ve made the shift to Aldi in the meantime, with it being increasingly unlikely that they’ll go back to the supermarket giant. But it’s not just domestic customers who are noticing a difference and having to make cuts and changes in the home to save money.

How have rising cooking oil prices affected businesses?

According to an article published by the BBC, throughout the summer of 2022 chefs and restaurant owners alike were forced to adapt their cooking styles and dishes so as to conserve their cooking oil supply. The owners and chef of the Cadeleigh Arms in Devon stated that the price of their olive oil had risen by a whopping 50%, forcing him instead to use cheaper alternatives, like rapeseed oil.

However, because of the swap, he’s had to take menu items down, such as dressed salads, as they require quality olive oil. The same article also detailed the struggles faced by another pub owner in Wingham, Kent, also commented on how the price of cooking oil has left him with few alternatives. It’s becoming increasingly more difficult for him to absorb the inflated price of cooking oil, forcing him to also remove popular dishes from their sterling menu.

This is a trend that shows no signs of stopping. Grant Fitzner, chief economist for the ONS, warned that business prices are remaining high overall.

Will the price of cooking oil go down?

With inflation showing no signs of easing and climate change set to keep bringing scorching summers, there’s no telling when the price of cooking oil is going to decrease. According to S&P Global, the cost of vegetable oil is likely to keep rising for the rest of 2023 as supply issues and other factors remain uncertain. However, there are some that claim that the wholesale price of cooking oil has fallen, only that price decrease isn’t being passed onto customers, states Mint. With little data to go off and no signs of a drop in cooking oil prices on the horizon, it seems we’re relying on inflation to decrease before anything else does.

Cater Oils is a highly-experienced cooking oil supplier and collector. Not only can we supply fresh cooking oil, but we can also collect waste cooking oil in exchange for cash or credit with us, helping you to save some money during a time where every penny counts. For more information about how we can help you today, get in touch with a member of our professional, dedicated team – we’re always pleased to hear from you.