According to the credit insurer Allianz-Trade, the sharp rise in food prices in recent months is not only due to the rise in raw material costs and energy prices. In some cases, consumer prices rose accordingly. “Excessive profit-taking” by companies made a noticeable contribution to food inflation last year, Allianz Trade inflation expert Andy Jobst told the German Press Agency.
“There seems to be increasing evidence of profit-taking and insufficient competition in areas with particularly high price increases, such as producers of dairy products and eggs, but also non-seasonal vegetables and fruits,” said the industry insider. Jobst said that more than a third of the price increases in Germany in recent months cannot be attributed to traditional drivers such as raw material costs or the development of energy prices.
According to Allianz Trade, food prices across Europe in the first quarter were almost 15 percent higher than in the previous year, and in Germany even around 22 percent.
No quick end in sight
“We are observing that food manufacturers in particular are hungry for profits. They have increased prices much more than retailers,” said Allianz Trade industry expert Aurélien Duthoit. Food producers in Germany would have increased around 18.8 percent in 2022 compared to the previous year, while food retailers “only” 12.6 percent. Many retailers appear not to have passed all of the increased costs on to customers. This is also reflected in the shrinking gross margins of many retailers.
The Allianz Trade experts do not expect the price increases for food to end quickly. They expect food in Germany to become more expensive again this year by more than twelve percent.
“For next year, the outlook for food inflation is better,” Jobst said. However, in many cases this means that prices have stagnated. “Experience has shown that price increases that have been implemented are rarely withdrawn.”
