September 27, 2023

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Grocery stores are still €69 more expensive per month than they were years ago: why aren’t prices falling?  |  money

Grocery stores are still €69 more expensive per month than they were years ago: why aren’t prices falling? | money

You’ve no doubt felt it in your wallet, but Testankop also points it out in black and white: Food prices are falling, but they’re falling painfully slowly. Compared to August last year, you’re still paying nearly 15 percent more for your groceries at the supermarket. What is still expensive today? Why are food prices falling so slowly? And nothing can be done about it? explains Laura Claeys of Testancope.

Each month, Testaankoop calculates which products in the supermarket are rising in price, which are (possibly) falling, and by how much compared to last year. About a year and a half ago, prices suddenly began to rise sharply, peaking in March 2022. Since then, “food inflation” has begun to decline slowly, but still very slowly. For example, a month’s grocery shopping for two people still costs on average €69 more than it did a year ago.

What food has become more expensive?

“For six months now, vegetable prices in particular have risen the most,” said Laura Claeys, a spokeswoman for Testancope. “In August, I paid an average of 31 percent more for vegetables than last year. Many of the vegetables that we grow here only in greenhouses are very expensive because heating those greenhouses in October of last year was very expensive. So we did not grow them and did not import them,” he said. “This entails additional transportation costs. But other vegetables are also expensive. What’s more, the strongest climbers are onions (+55%) and carrots (+70%). Onions are expensive because the crop was of lower quality than expected.”

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So far, we have not witnessed any significant decline in the prices of frying oil, semi-skimmed milk, small cheese, flour, and pasta, while the global prices of their raw materials have declined.

Laura Claeys, Buying Experience

What are we still paying too much for and why?

You’re still paying a lot for ketchup (+49%) and tomato paste (+41%). This is probably because raw materials, specifically tomatoes, were very expensive last year. The fact that frozen products are also expensive today is due to the numerous costs involved in processing them, such as wages and energy. Paper products also remain expensive. “You’re paying 20 percent more versus last year, and even 58 percent more than you paid two years ago, which is huge.”

Among other climbers, eggs (+25%), young cheeses (+23%) and bread (+15%) stand out. The prices of soft drinks (+9%), fish (+8%) and meat (+7%) also continue to rise. “We have been complaining for some time about falling global prices for products such as oil, grains and dairy products. But so far we have seen almost no decline in products such as frying oil, semi-skimmed milk, young cheese, flour and pasta. Why not? “It is difficult. We have to understand this, because we don’t know all the costs of food production. What we do know is that Belgian companies have had higher labor costs since the beginning of this year.

But do these labor costs outweigh lower raw material prices? Claeys continues: “However, it always takes some time before lower costs lead to lower food prices, partly because food producers have longer-term pricing agreements with supermarkets. However, we expected supermarket prices to fall.” Market more in the second half of 2023.

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In our view, global food companies will continue to maintain profits.

Laura Claeys, Buying Experience

Will there still be a lot of profit left over somewhere?

“Not in supermarkets, the competition between them is too great for that. I would also like to believe that Belgian food producers are not taking profits. In our opinion profits will remain with international food companies. Experts tell us that their profits for 2022 were noticeably high.

What can be done about it? France, for example, sets retail prices for 5,000 products. “This is a good first step,” says Laura Claeys. “The government will then negotiate lower prices with supermarkets, who will ultimately have to agree to lower incomes. But they can then use that in negotiations with their suppliers. In this way it puts pressure on food producers.”

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