The rise in prices in the supermarket adds up and continues in 2023 despite the VAT reduction

Lucia Ruiz Simon

Madrid, Dec 16 (EFECOM).- Shopping is 9% more expensive than a year ago and products such as the symbolic olive oil have risen by 66.7%, so Spaniards are forced to juggle to fill the refrigerator, despite the lowering of VAT, the efforts in promotions and the sustained advance of the private label.

With the latest data on the table, the increase in prices of the basic basket almost triples the increase in the cost of life in general, which has remained, according to the November CPI, at 3.2%.

To describe a reality with macroeconomic tentacles, but with a daily and direct reflection in the pocket of the Spanish, use the classic scheme of responding to the 5Ws of journalism (“what”, “who” “when” (when), “where”, and “why” can be practical to summarize the keys to food inflation in 2023, which has already accumulated two historic years.

Although the increase in the price of food and non-alcoholic beverages is on average 9%, there have been paradigmatic cases such as that of extra virgin olive oil, the watchword of the table and the Mediterranean diet, with increases of up to 44.5%. annual.

This is followed by other basic components of this dietary pattern such as fresh legumes and vegetables (+16%).

Also above 10% are pork (12.9%) and fresh fruits (10.1%); while the canned fruit reference has been the least inflationary (2.3%), followed by poultry meat (2.4%).

Given this situation, exceptional measures have been taken such as the reduction in VAT on food – eliminated a year ago for basic foods and reduced to 5% for oils and pasta -, with which Spain opened the year and which, according to Treasury data, has meant a decrease in State income of 1,294 million euros until September.

This measure, which was expanded in June and will remain in force from January as promised by the President of the Government, Pedro Sánchez, in his investiture speech, has been applauded by the entire sector, although he considers it insufficient as it does not include fish. and meats, in which the Popular Party agrees.

Throughout the year, the increase in prices for making purchases has translated into a monthly scare; The year started with a year-on-year increase of 15.4% in January and peaked a month later, with 16.6%.

It was not until October when it fell below the psychological double-digit barrier and registered slight decreases, partly also due to the comparative effect in 2022, when prices were already very high.

The Government opted for this VAT measure to contain inflation that fully affects lower-income families, but the previous Executive did not eliminate the shadow of doubt about the actions of companies, especially distribution companies, accused by some. directly from “getting lined.”

During the electoral campaign, Podemos even proposed the creation of public supermarkets.

Although it is true that all employers’ and business spokespersons have recognized an even “barbaric” price increase, the reports of the Bank of Spain and that of the National Competition Market Commission abound in the opposite idea, that is, that the distribution has not “taken advantage” of inflation.

There are several factors at the origin of the price increase, such as the rise in inputs such as electricity, fuel and raw materials, which, in turn, has its origin in geopolitical tensions such as the war in Ukraine.

In this case, the “help” of the climate with an extreme drought that has impacted some downward productions, such as the case of olives, is not an obstacle.

It has also affected regulatory application, with animal welfare laws that have reduced possibilities for egg production and others such as the food chain that have boosted the price received by some traditionally weaker links such as dairy farmers.

And other taxes that have taxed the entire chain and that end up being transferred to prices, according to the companies, such as the plastic tax.

There are no exceptions; Food has become more expensive in all the autonomous communities – with Melilla (11.3%), the Canary Islands (11.1%) and Castilla-La Mancha (9.7%) leading the way – and in all commercial formats, from the shops close to the hypermarket, passing through the supermarket.

The OCU report from September pointed out that the cheapest large chains are Family Cash, Alcampo, Supeco, Consum and Mercadona.

The Valencian chain continues to be the one that accumulates, by far, a large part of this market; Data from the consulting firm Kantar for the first half of the year placed its share at 26.1% and underlined the impact of its announcement in April of lowering prices on 500 items; Carrefour and Lidl follow.

Consumers have become experts in pricing and promotions; To control their spending, according to data from the consulting firm Circana provided to Efe, they look for packaged products at a fixed price, opt for smaller containers and “re-evaluate” their purchases to make them more affordable.

Thus, they have opted to switch to foods from the same family but cheaper; For example, they have bought 15.3% less lamb, but 6.7% more chicken and 27% more class M eggs, compared to the 7.8% drop in size XL.

All studies confirm the impact of white label in this context: if the Association of Manufacturers and Distributors Aecoc highlighted in September that Spain was already the country with the most white label in mass consumption in the European Union, Circana’s data on The food penetration of these brands is estimated at 55.9%; in the case of beverages it is only 30.4%.

Two months of decline and above 10% annually point to a scenario of, at least, price stabilization; Even so, the Federation of Food and Beverage Industries (FIAB) has already warned that prices are not going to drop and the Ministry has aimed for a “soft landing.” EFECOM

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