Consumers will have to dig significantly deeper into their pockets for food in 2022

Additional costs of 10 % expected

31-May-2022 - Germany

The cost of living has risen significantly recently, driven primarily by large price increases for gasoline, electricity and rents. But this is likely to be just the beginning: According to the latest Allianz Trade Study, food prices are set to rise significantly in 2022. Although these have already risen slightly in 2021, they by no means reflect actual developments on the manufacturer side.

"Consumers are likely to have to dig significantly deeper into their pockets for food in 2022," says Aurélien Duthoit, senior economist and industry expert at Allianz Trade. "Food retail prices are far from reflecting the actual increase in food prices over the past 18 months. So the worst is yet to come for households. In Germany, food retail prices are expected to rise by more than 10% in 2022. That's no walk in the park: on average, that's an extra 250 euros a year - per capita. And that's on top of massive price increases in other areas of daily life."

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Eurozone food and beverage producers have already increased their prices by an average of +14% (Germany: 16.6%) since the beginning of 2021, with the sharpest price increases in everyday products, including oils and fats (+53%), flours (+28%), and pasta (+19%) - driven mainly by the Russian invasion of Ukraine.

In contrast, food retail prices were adjusted upward by only a modest +6% (Germany: 6.6%). Food retailers have thus not even passed on half of the higher producer prices to grocery prices.

"Past experience has shown that retail prices by and large adjust to producer prices, albeit with some delay," says Duthoit. "High inflation and post-pandemic food sales declines in stores are putting pressure on grocery profitability. To that extent, price increases are likely to have a timely and significant impact on consumer prices."

Price increases of between 10.7% and 14.8% possible in Germany

Allianz Trade estimates that food retailers are likely to pass on around 75% of their additional costs to consumers. This results in a price increase of 10.7% in Germany. As a result, each consumer will pay an average of 254 euros more for the same basket of goods than in the previous year. For a two-person household, this corresponds to an increase of over EUR 500.

This means that the price increases in Germany are significantly higher than in our European neighbors. The European average is EUR 243 more per consumer, with the smallest price jumps likely in Poland (EUR +152) and Spain (EUR +200).

If the additional costs were passed on in full, consumers would have to dig even deeper into their pockets: Price increases of almost 15% would then be due in 2022 compared with 2021, or the equivalent of around EUR 350.

Note: This article has been translated using a computer system without human intervention. LUMITOS offers these automatic translations to present a wider range of current news. Since this article has been translated with automatic translation, it is possible that it contains errors in vocabulary, syntax or grammar. The original article in German can be found here.

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