Inflation falls but food prices rise – Charts

We are paying up to 70% more this year for some basic food and household items compared to February, just before the war broke out in Ukraine. In total, for a basic basket of products for which last year we paid 76 euros, this year for the same – almost – items, all branded products for comparison purposes, we pay almost 94 euros, 23% more. Prices are up on everything from milk, eggs and bread to stationery and cleaning products, with double-digit increases. And why are we talking about almost the same species? Because, a product that is now sold in a smaller package, specifically branded margarine, now costs 1.60 euros (200 grams) from 1.40 euros (250 grams).

One liter of fresh milk is now sold for 1.87 euros from 1.38 at the beginning of the previous year, in spaghetti the increase is 38.10%, in feta 21%, while branded toilet paper looks like a luxury item, with the price increases to reach 69%.

Taking into account the data of the family budget survey for the year 2021 and the fact that food inflation stood at 15.5% in December 2022, it follows that households are required on average, just for this category of goods, to spend about 360 euros from 311 a year ago.

The problem, of course, is much greater for economically vulnerable households, as while expenditure on food accounts for an average of 22% of household expenditure, in the poorest households it is considerably higher and for the poorest 20% of the population rises to 34.8%.

A year ago, if a household with a monthly income of 750 euros spent 164 euros on food, now it will have to spend around 190 euros, which in fact significantly reduces its purchasing power. A household with a total monthly income of €1,500 should now spend around 24% of its income, up from 20% a year ago, on food, while an average household with a total monthly income of €2,500 should now spend around 20% of its of his income from 15% a year ago.

Worse, perhaps, the rally in food prices does not stop here, with market executives predicting continued price appreciation until at least the end of the first half of 2023.

Products produced with expensive raw materials and not yet available for retail, continued uncertainty while the war in Ukraine continues and high prices for natural gas and electricity, despite any scaling back and subsidies to businesses, are the key reasons for the ominous forecasts regarding food price developments.

“The raw materials used to prepare the food are bought at very high prices. Therefore, prices in finished products will continue to rise. Even if the rise stops there will be stability at very high prices. There will be a change only after the summer harvests”, estimates Spyros Theodoropoulos, owner of a number of industries in the food sector (Nikas, Edesma, Ambrosia, Chipita Foods, Greek Juices and shareholder of ION and MEVGAL), speaking to “K”.

“Businesses, despite the increase in energy and raw material prices in 2022, tried not to make hasty moves, to move within the limits of their budgets and not to pass on all the increased costs to the prices of finished products. Even in the cases where the raw materials are a very high cost factor, the companies did not pass on 100% of the increase to the prices and we saw this characteristically in bread, eggs and poultry”, Stefanos Komninos, co-founder, points out speaking to “K” of consultancy Netrino, market analyst and former Secretary General of Commerce. “The fact that there is no significant retreat in energy and raw materials, while at the same time the degree of uncertainty has not decreased especially in relation to geopolitical developments, leads companies to now pass on the increased costs to prices, which they had restrained by a degree the previous period”, he adds.

Mr Komninos argues that the increases in the price lists are nominal in order to allow suppliers and supermarket chains flexibility with the offers afterwards. “Whether they will all be passed on to the consumer price will depend on whether in the next period there is a significant decrease in sales volume, consumption,” he emphasizes. It does not rule out the possibility that we will also see price increases in private label products in the new year, as the contracts that supermarkets have with industries are largely revised, contracts that in 2022 had “locked” prices. Such a development will in turn contribute to further price increases in branded products as well.

moneyreview.gr

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