DECRYPTION. Rising prices: Why shopping at the start of the school year is even more expensive
In July, consumer price inflation in France accelerated further. And the worst is yet to come. How does that translate specifically to the shelves? Olivier Dauvers is a journalist and retail professional.
Is the increase in food prices significant?
The prices are rising. For food, all indicators show that the increase is 7-10%. Behind this average are products that are far above it. These are all grain-based products, whether direct grain like pasta, flour, or cookies, or indirect grain like poultry or pork. 70% of the cost price of a pig or poultry is feed. The products in the poultry delicatessen sector increased the most. The increases have been over 25% since January 1st. At the same time, the wheat quotation is 25/30% higher than in the previous year.
Which products have risen the most?
The products that have increased the most are Fleury Michon chicken breasts at +38%, Fruit d’or oil at +37% and many everyday products at over 30%.
Is such a strong increase in such a short time unknown?
This is unheard of in the dual dimension of time and violence. We have never seen such a sharp increase in price in such a short period of time. It’s not harmful or slow, it’s violent and brutal.
Are all these increases justified?
When we are in a period of high inflation, there is always opportunism. The economy wants it. Some of the actors, admittedly a minority, benefit from it. But most of the increases are due to increases in resources, energy and transport. Are they all justified? The answer is no.
Can large retailers contain these increases for their customers?
When big retailers cut prices too much, they are blamed. If there is inflation today, we think it will line their pockets. You should know. The level of competition between dealers is such that it benefits the consumer. And so much the better. Price increases can be implemented more slowly, but are passed on. It’s better to have distributors who fight price than distributors who get along.
Does a private label make more effort in this regard?
Prices increase by 7 to 10%. The profitability of a distributor is on average around 1.5 to 2%. Mechanically, it’s easy to understand their inability to cushion the climb. Food distribution does not have the margins that could have compensated for the level of inflation.
In this context, are prices going down or is everything going up?
Only one product is cheaper: Buitoni pizzas (affected by a health scandal in spring, editor’s note). They have fallen by 2.5 to 3% within a year. There’s one category that’s growing much slower than average: baby products. Both diapers, formula milk and baby food. This is a category in which retailers make maximum efforts, since families with small children are very large consumers and these customers must not be lost.
Are there still bottlenecks this summer?
A scarce product, sunflower oil, has returned to store shelves. Today, traders no longer know what to do with it. The shelves are full and it no longer sells because the sunflower oil was bought at very high prices at the bottom of the wave. The real current shortage is mustard and it will not return. There is a real raw material problem: there are not enough mustard seeds.
How do you see autumn: will shopping become even more expensive?
I’m guessing we’re three quarters of the way up, which means there’s still 2-3% left on average. Unfortunately, average inflation will exceed 10, 11, 12%. It’s inevitable. All manufacturers have not yet passed on their new prices. Once they have done so, prices will still move. Private label will be more affected than big brands.