Notice of a sharp price increase to be expected in supermarkets. The French will have to buy less and turn to distributor brands.
© Sipa
The labels will still waltz in the spring. Likely scenario: coffee, +30%; pasta, +10%; oils, +8%… After years of stagnation or even decline, food prices have been on the rise for a year. “Before Ukraine, there were already many reasons to see consumer products increase,” explains Emily Mayer, from research firm IRI. We can cite the imbalances caused by the pandemic, the vagaries of the weather in 2021, the soaring costs of energy, transport, packaging and certain agricultural raw materials. Thus, sunflower oil has increased by 50% in the last six weeks. “These factors lead to price inflation of 3 to 5% in 2022, analyzes the specialist in mass distribution and ex-hypermarket boss Philippe Goetzmann. The war in Ukraine and the Egalim 2 effect might add some points. This law promulgated in October 2021 is supposed to better remunerate farmers and industrialists, following negotiations which have just been completed with supermarkets. The impact on the labels should especially hit the major brands.
A yellow vests effect on the plate
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The heat stroke would affect everyone, but primarily cereal-related products. The prices of these raw materials have almost doubled in a few months. For wheat and maize, of which 30% of world production comes from Ukraine and Russia, the situation is critical. Pasta, produced from cooked cereals and high energy consumers, has already seen its price jump by 13% in one year. Even 50% for high-end products. Meat, collateral victims of the increase in fertilizers and cereals, will also experience a notable increase.
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The impact for households will be significant. If food represents 12 to 14% of a family’s budget, it can reach 18% among the less wealthy, those who receive less than 1,180 euros per month. “These households might have a feeling of food downgrading, for example, by having to replace the rib steak with pork chops”, warns Philippe Goetzmann. A kind of yellow vests effect on the plate. The State, which is going to draw its food check, has understood this. To avoid the erosion of their clientele, supermarkets should communicate on the non-price increases of their house products. A rush towards distributor brands or even the first prices is to be expected. But the big winners will be the super-discounters, such as the Dutch Action or the Danish Normal: spartan decor, reduced assortment, zero but prices lower than low.