The general rise in fuel, electricity, and fertilizer costs resulting from the pandemic and the conflict in Ukraine will cause agricultural food prices to increase by 31% in 2021. They will also go up by 23% in 2022. This has an impact on the cost of food for Europeans. They will pay on average 243 euros more for the same shopping basket than they did in 2021, according to the Allianz European food inflation report.
The problem in Spain is the same as elsewhere in Europe. However, Allianz data shows that shoppers will find their shopping baskets less expensive than those of Europeans. For the same food, it will cost 200 euros more this year. This is due to the fact the Russian invasion of Ukraine caused years of low agricultural yields. This has not only affected the supply of basic food like wheat and oil but also had an impact on the prices for alternative products.
The Europeans spend an average of 2,287 euros per year on food. In our country, the figure is 2,100 euros. This will increase to 2,300 as a result of price increases.
The situation could worsen as retail prices for food are not yet reflecting the 18-month-old increase in raw materials costs. According to the report, food and beverage producers in Europe have seen their prices rise by 14% on average since 2021. The most notable price increases in supermarkets have been for oils (53%), flour (28%), and pasta (19%). However, the average adjustment is only 6%. This means that the retailers have not passed even half the rise in producer prices on to consumers.
Allianz explained that past episodes of high inflation have shown that producer prices are adjusted to retail prices with some delay. They also point out that high inflation and a decrease in sales volume after the pandemic will put pressure on businesses' profitability, which could lead to an "increased final price for the consumer".
The increase in food costs is accompanied by an increase in living expenses (fuel, electricity and rent), The report says that this "reignites the debates about possible social aid to ease the burden of most vulnerable households".