Germany-Study: Food prices may rise by more than 10% this year

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People in Germany will probably have to pay significantly more for food in the coming months, according to Handelsblatt. “In Germany, food retail prices are likely to increase by more than 10 percent in 2022,” said Aurélien Duthoit, a trade expert from the credit insurance company Allianz Trade. In conversion, this would amount to an average of € 250 per additional cost per inhabitant per year.

Despite recent price increases, he said, food retail prices are far from reflecting the real rise in food prices over the past 18 months. “So the worst is yet to come for households,” Duthoit warned.

According to the study, food and beverage manufacturers in Germany have increased their prices by an average of 16.6% since the beginning of 2021. The increases were stronger for everyday products, including oils and fats (increase of 53% ), flour (28% increase) and pasta (19% increase) – mainly due to the Russian invasion of Ukraine.

In contrast, food retail prices rose by only a relatively modest 6%, according to the study. At the same time, 75% of the total cost of food retail corresponded to the markets. Therefore, there is still a need to fill the gap here. “The past has shown that retail prices generally adjust to producer prices, albeit with some delay,” says Duthoit.

“High inflation and the post-pandemic decline in in-store food sales are putting pressure on the profitability of food retail,” Duthoit said. “To this extent, price increases are likely to have a timely and large impact on consumer prices.”

Indeed, in a recent survey by the Ifo Institute, 9 out of 10 companies in the food and beverage retail sector said they were planning further price increases. The main reason for the rise in prices is the higher costs for the supply of energy, raw materials, other intermediate products and commodities, Ifo reported.

And even from the agricultural sector, the latest messages were far from reassuring to consumers. The German Farmers’ Union warned just this week that the tense situation in agricultural markets as a result of the war in Ukraine is likely to continue for months. “The critical supply situation is likely to last until next year and beyond the 2023 harvest. Therefore, there will be further price increases for consumers,” said Deputy Secretary-General Udo Hemmerlin.

An example: dairy products. According to the industry association, they could soon become significantly more expensive. “In the case of dairy products with longer contract periods, some of the price increases have not yet reached the stores – this will only happen in the coming weeks and months,” Björn Börgermann, CEO of the Dairy Association, told the newspaper recently. New Osnabrücker Zeitung “(NOZ). “20% growth rates could very well be possible,” Börgermann continued. Ultimately, however, this is a matter of negotiation between dairies and retailers.

Meanwhile, large retail chains are at least trying to curb rising prices. In recent weeks, the head of Edeka, Markus Mosa, has repeatedly appealed to major manufacturers not to exceed the limit with price increases. “Rising consumer prices, however, should not serve as an alibi for industrial groups to maximize their returns with excessive price demands,” Mosa said.

Therefore, Edeka will avoid the inevitable price increases in negotiations with manufacturers. The inevitable price increases should not only be imposed on consumers, but spread throughout the value chain. Rewe’s boss, Lionel Souque, expressed a similar view.

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Source: Capital

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