In July, the increase in consumer prices accelerated further in France. And the worst is yet to come. In concrete terms, how does this translate on the shelves? Olivier Dauvers is a journalist and retail specialist.
Is the rise in grocery prices significant?
Prices go up. In food, all the indicators show that the increase is from 7 to 10%. Behind this average, there are products that are far above. These are all grain-based products, whether they are direct grains, such as pasta, flour, or crackers, or indirect grains, such as poultry or pork. 70% of the cost price of a pig or poultry is food. The products that have increased the most are found in the poultry delicatessen section. The increases have been above 25% since January 1. The price of wheat is 25/30% higher than last year at the same time.
Which products increased the most?
The product that has risen the most is Fleury Michon chicken breast which is at +38%, Fruit d’or oil at +37% and many daily products which are at more than 30%.
Is such a strong increase in such a short time unheard of?
This is unheard of in the double dimension of time and violence. We have never seen such a sharp increase in prices in such a short period of time. It is not pernicious or slow, it is violent and brutal.
Are all these increases justified?
When we are in a phase of high inflation, there is always opportunism. The economy wants it. A part of the actors, certainly a minority, benefits from it. But most of the increases are justified by the increase in raw materials, energy and transportation. Are they all justified? The answer is no.
Can the big retailers curb these increases for their customers?
When big retailers cut prices too much, they get blamed. Today, when there is inflation, we think that it fills our pockets. You must know. The level of competition between distributors is such that it benefits the consumer. And much better. Price increases may roll out more slowly, but will pass through. It’s better to have distributors who wage a price war than distributors who get along.
In this context, does a retail brand try harder?
Prices increase between 7 and 10%. The profitability of a distributor, on average, is around 1.5 to 2%. Mechanically, it is easy to understand that they do not have the ability to cushion the rise. Food distribution does not have the level of margins that could have offset the level of inflation.
In this context, do prices go down or does everything go up?
Only one product is cheaper: Buitoni pizzas (worried about a health scandal in the spring, editor’s note). They have dropped between 2.5 and 3% in a year. There is a category that is growing much less than the average: baby products. Both diapers, formula milk and baby porridge. This is a category in which distributors are doing their best because families with young children are very big consumers and these customers should not be missed.
Is there still a shortage this summer?
A product that was scarce, sunflower oil, has returned to the shelves. Today dealers no longer know what to do with it. The shelves are full and it is no longer sold because the sunflower oil was bought at very high prices at the bottom of the wave. The real current shortage is mustard and it’s not coming back. There is a real raw material problem: there are not enough mustard seeds.
How do you see the fall: shopping will be even more expensive?
I estimate that we are three-quarters of the way there, which means there is still 2 or 3% on average. Average inflation will unfortunately exceed 10, 11, 12%. It is unavoidable. All manufacturers have not yet passed their new prices. Once they have, prices will continue to move. Retailer brands will be hit harder than the big ones.
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