Why are prices soaring?
It is a combination of many factors: energy and fuel are more expensive, as is the production of many processed food products. The processing of sugar beets or the drying of powdered milk, for example, have increased their production costs due to the price of energy.
Agricultural raw materials, especially cereals, soybeans that feed certain animals, the durum wheat that makes up pasta, corn, have also soared, both for fear of shortages due to the Russian invasion of Ukraine and because some producing countries are reluctant to export and some crops are not good.
Other items of expenditure have increased: large imports, at the price of containers. but also packaging, cardboard, aluminum, glass. Sometimes you have to change supplier from one week to another, and not always on the same contractual terms. The boss of the milk giant Lactalis, Emmanuel Besnier, spoke of a “crisis in all production costs”, which is expected to increase by 15% in 2022.
Until when ?
This explosive cocktail looks like it will last, at least several months. Emily Mayer, a consumer product specialist at the IRI Institute, predicts 5% inflation “early in the summer” and a phenomenon that will be “settled”. Already in April it has increased by 2.9% compared to the same month last year, from 1.5% in March.
In “Le Parisien”, the president of the Système U supermarket, Dominique Schelcher, cited the example of Spain or Germany to estimate that inflation could rise to 10%, “especially because of energy costs.
The latter does not seem to be coming down. Both manufacturers and large retailers were strongly encouraged by the government to return to the negotiating table, the first considering that the annual negotiations, which ended on March 1, did not adequately take into account increases in production costs.
If, at the end of the negotiations, the distributors had bought more expensive agricultural products, prices would not have fallen off the shelves again before the summer.
What is the answer of supermarkets?
In this context of fear of purchasing power – the number one concern of French people according to opinion polls – brands minimize price increases with one goal: to retain, or even gain new customers, increasingly careful in receipt. .
With strong support from communication plans, they are also working on what industry expert Olivier Dauvers calls the “price picture”, that is, how customers perceive their prices. Michel-Edouard Leclerc thus announced an “anti-inflation shield” to offset coupons in E. Leclerc stores for price increases from May 4 on a selection of 120 high-consumption products.
The brands whose “price picture” is the best, E. Leclerc, Lidl or Aldi in particular, are also the ones whose economic performance is the best. But the competition is also trying to “crunch prices” and make it known.
What can the government do?
If Agriculture Minister Julien Denormandie pushed for the resumption of talks on agri-food prices in mid-March, the government is well aware of the problems posed by rising food prices.
It has already decided on costly measures to help households and businesses, in particular the freezing of the price of gas (cost € 6.4 billion according to a last estimate in mid-March), inflation compensation for the more modest ( 3.8 billion euros), a 15-minute reduction in fuel (3 billion).
But during the campaign, Emanuel Macron promised to go further, in particular through a diet check, help for people who use their car a lot to work or increase social minimum pensions and pensions.