2023-07-24 17:07:13
According to a study by Allianz Trade, inflation and low consumer confidence are holding back purchases of basic necessities but not more expensive items.
In these times of inflation and waning confidence, consumers should be less inclined to spend. Reality partially contradicts this scenario. A study by credit insurer Allianz Trade reveals that if consumers tighten their belts on food, electricity and fuel, they continue to loosen the purse strings to buy expensive goods (cars, appliances, furniture).
According to this study, carried out in the 4 major EU countries, the average household basket increased in a proportion between 132 euros in Spain, 244 euros in France, 290 euros in Germany and 301 euros in Italy. In France and Germany, revenue growth outpaced inflation. This development partly explains the (slight) increase in household spending, particularly on “non-primary” products.
If basic necessities are more affected, it is because of the greater exposure of the poorest households, for whom food and housing costs (rent, water, electricity) represent 57% of their expenses. Conversely, the prices of restaurants, leisure and clothing, which weigh more heavily on the budgets of the wealthiest households, increased less markedly. “Consumers also ensure anticipate possible price increases extra,” added Johan Geeroms, Benelux Risk Underwriting Director for Allianz Trade.
A “too rapid” rise in rates
This development, which also concerns Belgium, does not, however, remove retail concerns. “The retail sector has other concerns: staff shortages, wage increases, rising energy costs… And not all increases might be passed on to prices,” says Johan Geeroms. Who notes in passing that the automatic indexation of wages is in this context a welcome oxygen balloon.
Faced with rising costs, European retailers are struggling to keep their heads above water. But the risk concerns rather small or medium-sized enterprises, who do not have such strong backs and are subject to a “too rapid” rise in interest rates.
“In 2022, the big brands were not able to pass on 100% the surge in input prices. But these fell in 2023, and they did not lower their prices for all that.”
Even here, the risk of a shipwreck “à la Makro” is minimal, believes the expert from Allianz Trade. “In 2022, the big brands were not able to pass on 100% the surge in input prices. But these fell back in 2023, and they haven’t lowered their prices yet, which allowed them to recover lost margins”.
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