price increase of 3% in April in supermarkets, unheard of for 14 years

price increase of 3% in April in supermarkets, unheard of for 14 years

Inflation is making a comeback in supermarkets with spectacular increases in April. By summer the increase could even reach 5% according to Iri.

This time inflation is there. While there have been price increases in supermarkets for a few months, they have so far been limited to a few first-price products (pasta, frozen foods, oils, etc.). But in recent weeks, the rise in prices has become widespread and consumers are beginning to feel the difference in their shopping cart.

From 0.58% in February, the rise in prices of consumer products (food + hygiene) rose to 1.49% in March and almost doubled in April to reach 2.89% over one year, according to Iri. This is the inflation of demand, that is to say the average increase in the prices of products actually purchased by customers of supermarkets and not just price readings in stores. On food products alone, the observed increase even exceeds 3% (3.01% precisely).

Evolution of the prices of consumer goods in supermarkets (Iri)
Evolution of the prices of consumer goods in supermarkets (Iri) © BFM Business

Levels of inflation that had not been observed by Iri for 14 years! We have to go back to mid-2008 to observe increases of more than 3% in supermarkets. In those years, prices had risen by 4.7% for all products combined. Since the end of the 2000s and over the whole of the 2010s, the trend was rather towards stabilization or even deflation, as can be seen on this graph.

Price trends since 2007.
Price trends since 2007. © Iri

This increase now concerns all segments. The major well-known brands first, which since the end of trade negotiations have taken an average of 2.64%, then distributor brands with an observed inflation of 3.28% and especially the first prices with a soaring 6.6 %.

If the increase is greater on the least expensive products, it is because these are products that are not supported by marketing and whose weight of raw materials is greater in the final price.

The flambé of the pasta

By type of product, pasta is experiencing the most spectacular increase. +15.31% on average over one year ahead of frozen meats (+11.34%), flours (+10.93%), oils (+9.98%) and mustards (+9.26% ).

“Rising prices now affect more than 90% of categories and are reaching very high levels on more and more products, notes Emily Mayer, IRI’s business Insight director in LSA. If pasta inflation does not progress only slightly compared to March, it nevertheless reached +15% in April.Meat, oils and flour are now posting double-digit inflation.The increase in inflation compared to March is very strong for meat and coffee. The paper categories (paper towels, toilet paper, tissues) are on high levels of price growth around +6%.

A price increase that should still grow. Faced with rising raw material costs, manufacturers and distributors have reopened a round of negotiations which had initially ended in mid-March. The two parties had agreed on an average increase of 3% but the increased pressure on raw materials could lead to an average increase of 5% at the start of the summer, anticipates Iri.

“The conflict in Ukraine adds considerable pressure (price and supply) on the already very tense subjects of energy and basic agricultural raw materials for human and animal food (wheat, corn, sunflower, barley, rapeseed…), analyzes Iri in his monthly note. The duration and severity of the war in Ukraine will determine the magnitude of the inflation peak and the duration of the episode.”

The falling pastis

In this context, some products are nevertheless surprisingly spared. Products on which distributors agree to price efforts to stand out from the competition. This is the case for ham (-1.32% in April), diapers (-1.56%) and especially aniseed aperitifs (-2.87%).

Initiated by Leclerc in December, the “Ricard war” now affects all large retailers, which on average offer a liter of pastis at less than 20 euros. An effort made possible by the new Egalim law which has revised its method of calculation on the increase in the resale threshold at a loss set at 10%. In the old version, this threshold was calculated by including consumption rights, the calculation base is now made before taking into account these “taxes”. But on spirits, these taxes are very high and represent 12% of the final price of a bottle of Ricard.

Frederic Bianchi