The French are not done with their “problem number one”according to the Bank of France. “High inflation is expected to last this year and start to decline early next year”, warned the governor of the institution, François Villeroy de Galhau, Wednesday, May 11, on France Inter. After 4.8% in April, the rise in prices over one year, all sectors combined, could exceed 5% in May and reach 5.4% in June, reducing household purchasing power, according to the Institute National Statistics Office (INSEE).
>> Inflation: ten tips to limit the increase in your food expenses
How can this worsening of the situation be explained? Part prices at the pump, soaring now wins the shopping carts. Visualize in six graphs how food is in turn affected by this galloping inflation.
Food shopping more expensive by 3.8% (expecting worse)
For the first time since the 2008 financial crisis, the consumer price index in the food sector could jump by more than 6% in June. INSEE expects an increase of 6.3% compared to June 2021. For May, the forecast is 5%, against 3.8% recorded in April – already unheard of for more than ten years.
Among the various components of inflation calculated by INSEE, it is energy (fuel, gas, electricity, etc.) which has been marked by the strongest surge for a year, but a slowdown seems to have begun on this forehead. The steepest curve is now the power curve. Inflation in the services and manufactured goods sectors remains more moderate.
The surge that began last summer on the shelves is the result of outbreaks suffered by producers and distributors. Energy costs, yields affected by droughts, international competition… Raw materials are increasingly expensive, as evidenced by agricultural producer prices, which jumped in March by 27% in one year, according to INSEE. Packaging, such as cardboard or plastic, also has “taken 40 to 50% increase for about a year”, alerted the Agricultural Cooperation in November. The transport of goods is also becoming more expensive, particularly due to fuel prices.
With the effects of the war in Ukraine and the latest trade renegotiations between the retail giants and their suppliers, food price increases could approach 10% before the end of the year, according to several sector players. including the Trade and Distribution Federation.
Oil, vegetables and fish, main families affected
In April, it is in the edible oils and fats department that the boiling is strongest, with an overall increase of 7.2% over one year, according to figures from INSEE, revealed on Friday and calculated in supermarkets and other points of sale. This is followed by vegetables, then fish and seafood, both up by more than 6%. Four other food families show above-average inflation of 3.8%.
The jump in labels is particularly pronounced for oils of the sunflower and rapeseed type. These oilseeds were victims of strong global demand and poor harvests, even before the context of shortages linked to the war between Ukraine and Russia, two major producing countries. In just three months, these oils have seen their prices take off by 11% (and 15% over one year). The one-liter bottle of Lesieur Isio 4 oil thus went from 2.93 euros to 3.42 euros on average between January 1 and May 9, according to the NielsenIQ institute, quoted by the specialized site Le Web Grande Cons.
On the vegetable side, the boost comes mainly from fresh vegetables. Despite very variable situations from one species to another, the interprofessional organization Interfel, joined by franceinfo, highlights the increase in energy costs, in particular for crops in greenhouses, which consume electricity. Other reasons: “higher prices of agricultural inputs”, starting with fertilizers, often produced in Ukraine or Russia, and “bad weather that has strongly affected the Mediterranean basin” these last months.
Fish, on the other hand, bear the brunt of the increase in fuel prices, which has a major impact on the profitability of sea trips for fishermen and which is partially passed on to consumers. The post-Brexit uncertainties on the fishing areas also contribute to panicking the courses, already under tension for a while due to the growing appetite of the French for fish, as recalled Le Figaro. The effects of this inflation are already being felt in consumer habits: “In 15 days, our sales volumes [de poisson] fell by 10 to 15%”affirmed, in March, the group Système U, in The Parisian.
Pasta, flour and meat hit hard
Beyond the main food families, if we look at the detail by product, the first place in the ranking is occupied by frozen fruits, the price of which in stores has jumped by more than 30% over one year. An increase to be put into perspective, because it mainly concerns 2021, and these items are little consumed. The presence of pasta (+12.3%) and flour (+9.7%) in the top 5 is more significant, as these purchases are symbolic. The kilo of Barilla spaghetti now reaches 1.83 euros on average, compared to 1.53 on January 1, according to NielsenIQ. In one year, producer prices for cereals have increased by 69% in France, notes INSEE.
Meat occupies several positions in the top 20 of the most inflationary products, starting with sheep meat (+7.7%) and beef (+6.5%). “The origin of this trend has been identified: the production costs of energy and animal feed, which soared even before the Russian-Ukrainian conflict”note 60 Million consumers. Poultry (+6.4%) is also affected by the effects of avian flu.
“First prices”, first on inflation
Inflation hits entry-level products more directly. In one year, in mass distribution, the so-called “first price” brands have seen their labels burn twice as much as the average, according to the IRI institute. The price of “first price” pasta has even made an annual jump of nearly 44%, against less than 14% for all ranges combined, according to NielsenIQ for 60 Million consumers. “On certain first prices of pasta, we observe an increase of 70 to 75% on pasta shells”advances Sophie Coisne, of 60 Million consumerson franceinfo.
“It’s logicanalyzes Emily Mayer, consumer specialist at IRI. These basic products, which hold their low prices from the absence of marketing and advertising expenses, have no levers to cushion the increase in costs. Everything goes into the price on the shelf. Conversely, private labels and especially national brands can choose to cut back on these additional expenses to avoid penalizing the consumer.
Are consumers turning away from first-price products? Not at all, on the contrary. Faced with inflation, the tendency is to go downmarket and turn to low prices. “The first prices remain, despite everything, more than 60% cheaper than the national brandspoints out Emily Mayer, of the IRI. We therefore observe an increase in sales of ‘first prices’ of 8%, while the overall market is down by nearly 2%. For Vincent Bronsard, president of Intermarché and Netto, customers can thus “erase inflation” by changing the composition of their basket, including buying more private label products, “overall 20% cheaper than national brand products”.
Differences between brands
Just like “first price” products, so-called “discount” or entry-level brands are more sensitive to the effects of inflation, which they struggle to pass on elsewhere than on the prices displayed on the shelves. This is suggested by the figures from the IRI – which however only relate to French brands such as Netto and Leader Price, for lack of access to data from Lidl and Aldi. Despite everything, here again, these brands should succeed in attracting new customers, thanks to lower prices.
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